MRTPC finds IGL's price recipe hard to digest
There’s good news for consumers buying piped cooking gas in the Capital. The monopoly watchdog has launched an investigation into the pricing policy of public sector piped natural gas supplier Indraprastha Gas (IGL).
By Gireesh Chandra Prasad, TNN |
NEW DELHI: There’s good news for consumers buying piped cooking gas in the Capital. The monopoly watchdog has launched an investigation into the pricing policy of public sector piped natural gas supplier Indraprastha Gas (IGL). The Monopolies and Restrictive Trade Practices Commission (MRTPC) wants to know why IGL does not pass on to customers the benefit of subsidised oil it gets from the government.
The commission has asked its investigation wing to probe allegations that IGL’s margin is almost double that of MNC-promoted companies selling piped gas in Maharashtra and Gujarat. The difference in price is glaring considering that British Petroleum-promoted Gujarat Gas and Maharashtra Gas do not get subsidised oil at government-administered price. Yet, their gas is cheaper than IGL’s, according to a consumer’s complaint, which the regulator wants its investigation arm to examine.
The commission’s director-general of investigations and registration has 60 days to complete the inquiry and submit a preliminary report.
While Gail India supplies to IGL, other players have to buy gas from the former at market price, the complaint points out. It is alleged that although the price of piped gas at Rs 13.52 per standard cubic metre (scm) in Delhi compares favourably with the price of Rs 14.9 per scm for a gas cylinder in the Capital, IGL does not pass on the benefit of the subsidy on piped gas to consumers.
As per the complaint, the administered price works out to a weighted average of Rs 5.06 per unit (including the tariff for the Hazira-Bijapur-Jagdishpur pipeline and sales tax). The complaint alleges that as per the calculation, the company charges a margin of Rs 8.46 per unit, double the margin of Gujarat Gas.
The company gets gas at the Capital’s ‘city gate’, and no extra transportation charges are involved. Besides, the company has been making impressive profits, although the turnover has not increased significantly. In less than 10 years, the company has built up a reserve and surplus of over Rs 325 crore on an equity base of about Rs 140 crore, the complainant told the regulator quoting the company’s March 2007 balance sheet.
The complainant has pleaded with the commission that the company be directed to lower the price of gas to Rs 9.25 per scm and refund the overcharged amount to consumers or adjust it in future bills.
The commission has asked its investigation wing to probe allegations that IGL’s margin is almost double that of MNC-promoted companies selling piped gas in Maharashtra and Gujarat. The difference in price is glaring considering that British Petroleum-promoted Gujarat Gas and Maharashtra Gas do not get subsidised oil at government-administered price. Yet, their gas is cheaper than IGL’s, according to a consumer’s complaint, which the regulator wants its investigation arm to examine.
The commission’s director-general of investigations and registration has 60 days to complete the inquiry and submit a preliminary report.
While Gail India supplies to IGL, other players have to buy gas from the former at market price, the complaint points out. It is alleged that although the price of piped gas at Rs 13.52 per standard cubic metre (scm) in Delhi compares favourably with the price of Rs 14.9 per scm for a gas cylinder in the Capital, IGL does not pass on the benefit of the subsidy on piped gas to consumers.
As per the complaint, the administered price works out to a weighted average of Rs 5.06 per unit (including the tariff for the Hazira-Bijapur-Jagdishpur pipeline and sales tax). The complaint alleges that as per the calculation, the company charges a margin of Rs 8.46 per unit, double the margin of Gujarat Gas.
The company gets gas at the Capital’s ‘city gate’, and no extra transportation charges are involved. Besides, the company has been making impressive profits, although the turnover has not increased significantly. In less than 10 years, the company has built up a reserve and surplus of over Rs 325 crore on an equity base of about Rs 140 crore, the complainant told the regulator quoting the company’s March 2007 balance sheet.
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The complainant has pleaded with the commission that the company be directed to lower the price of gas to Rs 9.25 per scm and refund the overcharged amount to consumers or adjust it in future bills.
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