The Telegraph
Since 1st March, 1999
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Watch it gas-guzzlers! Bump ahead

New Delhi, Nov. 3: Housewives across the country will soon have to prepare for an agonised wait for gas refills.

The country's oil refiners ' the Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum ' have decided to cut back on their LPG supplies to pare losses they have been suffering because of the highly subsidised rates at which they sell cooking gas.

A senior IOC official confirmed that orders had been issued to LPG distributors that the number of cylinders being supplied to them would be calculated on the basis that one LPG cylinder lasts 21 days for each household.

He told The Telegraph that there was no shortage of LPG in the country. However, as the subsidised domestic cooking gas was being diverted on a large-scale for commercial use in hotels, dhabas and running automobiles as well, the oil companies had decided to take steps to prevent this misuse.

'Our calculations show that normally each household needs a fresh LPG cylinder after a month. The 21-day estimate, therefore, should ensure a liberal supply for genuine domestic users and there should be no shortage,' he explained.

The move is based on the assumption that the distributors will be fair and make the gas available only to genuine household users on their list.

However, the danger is that unscrupulous dealers can exploit the situation and play up the 'shortage' angle to demand a premium on the gas. A higher premium from illegal users would tend to ensure that they get their supply while genuine households suffer.

There have been reports that LPG distributors have started asking their customers to wait for three days to a week. The distributors claim that the oil companies have started slashing supplies. This could well trigger a scare of impending shortages which the supply sharks could exploit.

The oil companies are losing Rs 158 per cylinder on the sales of domestic LPG as the government has not allowed them to increase prices despite skyrocketing international prices of crude oil and petroleum products.

The oil companies want to reduce these losses and this appears to be a drastic measure to achieve the goal.

During the summer, about six to seven shiploads of LPG were being imported against one or two the same time last year. This was initially increased to 12 shiploads and now has been enhanced to 17.

Each ship brings in 13,000 tonnes of LPG, which is valued at $380 per tonne inclusive of freight. The monthly cost of these imports at current prices works out to over $84 million.

The suspicion that cooking gas is being illegally diverted to run vehicles has been strengthened by the fact that the demand for petrol during August this year fell by 5.3 per cent compared to the same month in the previous year despite the increasing car sales.

The demand for LPG during August, however, went up by 12 per cent in August compared to the same month in the preceding year.

Figures for the five-month period between April and August of the financial year 2004-2005 and the corresponding period of the previous year show that while LPG demand surged by 15 per cent, that for petrol went up by 4 per cent.

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