The guideline also asks the government to limit such subsidized supply to just one cylinder per month for each family. It also advocates that such subsidy, however, should be distributed in the form of post-purchase cash refund.[break]
“We have already forwarded the subsidy distribution guidelines to the Ministry of Commerce and Supplies (MoCS) on Friday. Hopefully the Ministry will endorse it soon, paving the way for earliest enforcement of the subsidy,” said Suresh Kumar Agrawal, acting chief of the NOC.
The guidelines do not mention the subsidy amount. “It will be decided by the government,” Agrawal told Republica.
NOC has pushed for earliest enforcement of subsidy to household customers because it would enable the corporation to raise LPG prices, plugging the existing gap between import and retail rates, something which inflicted it a loss of Rs 5.5 billion in the last fiscal year alone.
Moreover, as the new arrangement will exclude 40 percent of its existing LPG customers -- such as hotels, restaurants, party palaces, factories and automobile operators -- from the facility, the corporation anticipates the move will bring down its loss by similar proportion. “This can instantly curtail our loss by more than Rs 366 million a month,” said Agrawal.
The guidelines lay a strong emphasis for developing the database of household and commercial consumers of LPG and regularly update. “This is crucial if we are to make sure no leakage occurs,” said Agrawal.
- Only household consumers to get subsidy
- Each family to get 1 cylinder of subsidized supply per month
- Model of subsidy distribution: post-purchase cash refund
- NOC expects loss on LPG trade to go down by 40%
In order to ensure that the guidelines proposes the government to issue customer cards to all consumers and differentiate the color of cylinders for supplying LPG to household customers and commercial users.
“To further check the chances of leakage, we have provisioned that subsidy will be provided in the form of cash refund. And for its distribution, we have recommended the government to mobilize employer organization and education institutions,” said a NOC official involved in drafting the guidelines.
If the government endorsed the guidelines, NOC will ask students to claim subsidy (cash refund) from the colleges by furnishing the receipt of purchase. People working in government offices, factories and other private firms will be asked to get the subsidy from their respective employer institutions.
But it remains unclear how individual families whose source of income is through small private businesses can claim their refund are they are not employed by the government, the private sector or are students.
“The government will provide the cash to be refunded directly to the institutions,” said the official.
However, the guidelines do not cite anything about how it would ensure just one member of the family is claiming the subsidy. Officials said it would be attained through ´customer card´.
“As one family will get just one customer card, only the person whose name is mentioned in the card can claim the refund,” said the official.
But given that the NOC has decided to mobilize dealers retailing products of LPG bottlers to identify and issue customer cards, there exists equal chance of dealers playing foul game and issuing more than one card to a family. Such extra card could easily reach commercial consumers, thus triggering leakage.
“We cannot rule that out. Hence, we have strongly pushed for the introduction of differently colored cylinders for supplying gas to household and commercial consumers,” said the source.
In the guidelines, the NOC has cited that the bottlers should use red colored cylinder, which is presently in use to supply LPG to household consumers, and blue colored cylinders to distribute gas among commercial ventures.
However, LPG bottlers have been vehemently protesting the MoCS and NOC´s plan to introduce dual cylinders, saying that differentiating the cylinders would inflict them a cost of some Rs 500 million.
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