No more LPG marketing rights: Govt

NEW DELHI: The government has decided not to give LPG marketing rights to Reliance Industries (RIL), ONGC and Gail in view of the current market scenario, where the products are being sold at heavily subsidised prices.

The option for the government was to either allow them to sell only to non-PDS customers at market rates or to bring them in into the existing system where they sell the products at subsidised rates.

Senior government officials said it would be difficult to manage more players in this scheme as it meant doling out subsidies to more companies. The option of allowing them to sell at market rates, primarily to industrial consumers too was struck down at this stage, as it would go against the oil marketing companies who are having to bear huge losses on the sale of cooking fuels.

The subsidy bill for the cooking fuel was set to be a staggering Rs 26,000 crore this fiscal. ���The system of getting to meet the subsidy bill is already in a mess with the government and upstream oil companies coughing up huge sums to reduce the losses of the oil marketing companies.

Adding some more players to this system does not make much sense,��� a senior official said. While companies like ONGC have doled out almost Rs 12,000 crore towards the subsidy bill, the government itself, had to offer oil bonds of over Rs 11,000 crore to meet this shortfall.

This year, the government had directed LPG producing companies like ONGC, GAIL and RIL to sell the product at a discount to the oil marketing companies. This did not go down well with these players and private players like RIL has already expressed its unwillingness to sell the product at discount prices.

It is also understood that RIL may end up exporting the product as it lacks requisite storage capacity.