The Telegraph
Saturday , January 11 , 2014
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Flip-flop over LPG quota

Moily: Shifting stance

New Delhi, Jan. 10: Petroleum minister M. Veerappa Moily today said the government would “seriously consider” raising the subsidised LPG quota to 12 cylinders per household.

Only last week Moily had said there was no proposal to increase the quota. Today he made a U-turn and said he would consult finance minister P. Chidambaram and move the cabinet committee on political affairs.

The comment came after Congress MPs Sanjay Nirupam, P. C. Chacko and Mahabal Mishra met Moily with a petition, requesting an increase in the quota of subsidised LPG cylinders to 12 per household in a year from nine.

Chidambaram had last week said there were demands from “several chief ministers” to raise the quota and that the government “will look into” them.

On Monday, oil secretary Vivek Rae had dismissed any proposal to raise the LPG limit. Increasing the LPG quota to 12 will result in an additional subsidy burden of Rs 3,300-5,800 crore, Moily said.

According to the minister, 89.2 per cent of the population consumes up to nine cylinders a year and only 10 per cent have to buy the additional requirement at market price. If the quota is raised to 12, about 97 per cent of the consumers will be covered by subsidised LPG, he said, adding that 69.5 per cent of the consumers use only six cylinders a year.

Officials said state-owned oil firms were losing Rs 762.70 per cylinder on the sale of subsidised LPG.

Gas price formula

The government today notified a new natural gas pricing formula that will almost double the rate to $8.2-$8.4 per million British thermal unit (mBtu) from April.

The new guidelines would apply to all natural gas produced in India, irrespective of the source, whether conventional, shale or coal-bed methane.

Barclays Equity Research estimates the price will rise to $9.1 per mBtu in 2015-16 and to $9.4 in 2016-17.

Goldman Sachs expects the price to be more than $10 per mBtu by 2015-16.

The formula will be applicable for five years, that is till March 31, 2019.