New Delhi, Oct. 5: Petroleum minister Mani Shankar Aiyar believes that many distributors are diverting subsidised cooking gas to commercial users like hotels, restaurants and automobiles, charging black market rates and denying supplies to households.
The minister’s comments ' echoed by oil company officials -- came as queues outside cooking gas dealers’ shops lengthened in many parts of the country.
While diversion is illegal, it also demonstrates the irony that if cooking gas was not subsidised, there would not have been a black market unless there was a real crisis.
Diverting subsidised gas meant for households is a long-standing practice and in a situation of mild shortage domestic consumers are affected the most because a distributor makes more money by selling the cylinder meant for them to a hotel or a restaurant which is ready to pay black market rates.
Even after paying black market rates, such users are making a saving because prices for commercial consumers are still higher.
“This illegitimate, illegal and completely unacceptable diversion of domestic LPG cylinders to commercial use' has to be stopped,” Aiyar said.
He has called a meeting of oil companies ' an agency report said the talks would be held tomorrow ' to discuss the availability of gas as it is a sensitive political issue.
Indian Oil Corporation will import over 300,000 tonnes of additional cooking gas in October and November.
The shortage was also being attributed to a shutdown of Reliance Petroleum’s refinery and a rush of supplies to the hurricane-hit US.
Restrictions have been placed on domestic consumers ' a booking for a refill is not being taken before 21 days have passed since the last delivery.
Some officials say panic booking by households also creates a situation of excess demand.
Aiyar feels the current policy of limiting the number of cylinders supplied to distributors needs to be reviewed as it has not stopped diversion.
Oil companies are regulating supplies to distributors on the premise that one cylinder lasts a customer 40 days.
Strangely, because of subsidised supplies, in a shortage when sales are low, oil companies stand to cut their losses, particularly in the current situation where world prices are shooting up.
An oil executive said gas price in the international market had rocketed to $530 per tonne. Oil companies are losing nearly Rs 95 on each cylinder.