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OMCs make provisions for PMUY losses
State-run oil marketing companies (OMCs) classified a section of loans provided to beneficiaries of the Pradhan Mantri Ujjwala Yojana (PMUY) in FY18 as ‘doubtful’ as recipients did not ask for LPG refill for a year.
While Indian Oil has made a provision of Rs 162 crore for inactive beneficiaries at the end of FY18, HPCL and BPCL have also made provisions of almost half that amount each.
Indian Oil is the leader in providing almost 50% of around 4.95 crore liquefied petroleum gas (LPG) connections released till date under the government’s flagship scheme.
“Companies have already made provision in the accounts of (FY18) for those beneficiaries who have not taken refills for at least a year. If these beneficiaries continue the trend and do not come back for refills, these provisions will be classified as bad debt,” said a source, adding that this provision has been made on auditors’ insistence.
Under the scheme, of an LPG connection cost of around `3,200 — including stove, refilled cylinder and safety hose — the government pays `1,600 as one-time assistance. The rest is to be borne by beneficiaries. The beneficiary can pay her share upfront, or opt for a loan, wherein the amount is realised by not repaying the beneficiary the amount of subsidy — transferred as a direct benefit to bank account — on subsequent refills till the loan amount is recovered.
While the scheme was launched in May 2016 with an initial target of providing clean cooking fuel to 5 crore women beneficiaries belonging to the below-poverty-line category as per the Socio Economic Caste Census (SECC) 2011 list, the target has been increased to 8 crore. The initial allocation towards the scheme was `8,000 crore, but `4,800 crore was later added and the scope of the scheme has also been extended beyond the SECC.
Data show that Indian Oil released around 62 lakh LPG connections under the PMUY in FY17. Of this, close to 9.5 lakh did not come back for refill by March 31, 2018. In FY18, Indian Oil released 48 lakh connections, of which around 27 lakh did not return for refill by the end of the year.
Similarly, BPCL released close to 29 lakh LPG connections under the PMUY in FY17, of which 4.7 lakh beneficiaries were still using the installation refill by March 31, 2018. In FY18, BPCL issued around 30 lakh connections, of which 17 lakh did not return for a single refill by March 31, 2018.
As per government figures, a PMUY beneficiary on an average takes four refills a year, compared with the national average of 7.2. The government claims that the dropout from the scheme is 20%, and that the rest 80% beneficiaries have at least come back for one refill.
To promote more refills, OMCs stopped collection of payment from beneficiaries for six months starting end-March 2018. “The companies will have to decide whether to extend the scheme (non-collection of loan repayment) or not, once trends after six months are clear. The loan amount will be recovered once people start refilling,” the source said. Jeff Locke Authentic Jersey
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