The Telegraph
Wednesday , December 12 , 2012
Since 1st March, 1999
CIMA Gallary

Moily spills gas cap sop, EC blocks it


New Delhi, Dec. 11: The Centre has let slip that the number of subsidised LPG cylinders will be raised to nine from six a year, the much-speculated declaration of intent coming almost on the eve of the Gujarat elections and earning the wrath of the Election Commission.

“I think it is likely to go up definitely from six (cylinders) to nine (cylinders). We need to take it to the cabinet,” Union petroleum minister M. Veerappa Moily told reporters.

Within an hour of the statement, the Election Commission directed the Centre to suspend any such move.

In a letter to Moily, the commission said it has “taken strong exception to the announcement when the first phase of polling in Gujarat is only two days away”.

Directing the oil ministry to “stop any move to raise the subsidised cylinder cap”, the poll panel asked Moily to explain the move by tomorrow when the model code of conduct is in force.

The first phase of the Gujarat election falls on Thursday and a model code of conduct in place forbids the government from making any announcements that could influence the decision of voters.

The poll panel had earlier slammed the government’s announcement of implementing Aadhaar-based cash transfer scheme from January 1.

The poll panel has asked Moily for an explanation. The minister is expected to defend himself by saying he had not announced any decision as such a step can only be taken by a cabinet panel.

The original decision to cap the supply of subsidised cooking gas at six cylinders was taken by the cabinet committee on political affairs on September 13 and the decision to raise it would also have to be taken by the cabinet panel, Moily said.

Moily said he has had two rounds of discussions with finance minister P. Chidambaram on the impact of the decision to raise the cap. The government will have to provide an additional Rs 9,000 crore annually if the cap is raised.

“We are working on that,” he said on ways to mitigate the additional subsidy requirement. “We are working on a certain formula to neutralise it.”

The oil companies have reportedly made it clear that they will be unable to bear more subsidy and will need to be compensated in full if the quota is raised.

If the cap on subsidised cylinders is increased by three, the additional burden on the oil firms will be Rs 3,000 crore for the remaining months of this financial year. From the next year, when the full subsidy comes into effect, the additional burden will increase to Rs 9,000 crore.

Even after the six-cylinder cap, losses on sale of domestic LPG during 2012-13 is estimated to be above Rs 32,000 crore.