Reliance Industries (RIL) is looking to lure away many of the one crore cooking gas consumers who have surrendered subsidy from state oil companies in a bid to challenge the neartotal dominance of state firms in cooking gas distribution.
“They are a potential for us,” a senior executive at Reliance Industries said, referring to customers who don’t want subsidy but could be lured away with better service. The executive requested not to be named. Reliance currently has a minuscule consumer base for cooking gas, or liquefied petroleum gas (LPG), mainly because the government currently provides subsidy only to customers of state firms such as Indian Oil, Bharat Petroleum and Hindustan Petroleum.
The government has been encouraging well-off people to give up cooking gas subsidy, resulting in about 1.04 crore consumers giving up their subsidy claim in a little more than a year. More people are expected to opt for this. India has about 17 crore cooking gas consumers, mostly being served by state-run distributors.
Reliance currently distributes 15-kg LPG cylinders to 10 lakh domestic customers mostly in Gujarat and Maharashtra, and also in Madhya Pradesh and Rajasthan, the executive said. The subsidy most cooking gas consumers in the country receive from the government has prevented private cooking gas distributors from building any significant presence.
But the expanding base of non-subsidised consumers as well as fast shrinking subsidy amount, which is down to Rs 64 per 14-kg cylinder from Rs 168 in just a year, have boosted private players’ chance. Instead of selling the LPG its produces at its Gujarat refinery to state companies, Reliance would like to distribute it directly to consumers.
The company has also recently sought the government support for distributing subsidised cooking gas. “We are saying that why should you deny our customers the subsidy. You can directly give subsidy, you don’t even have to involve us. Those consumers deserve as much as the consumers of the public sector companies do,” the company executive said.
“Until such time they (government) actually start a direct disbursal, directly into (customers’) bank accounts, and not through oil companies, it will be difficult for them to do it; that’s what they (government) are saying,” the executive said.
The government is evaluating Reliance’s proposal, oil ministry officials said. At present, the state companies first recover full price for the cooking gas from consumers and then within days transfer the subsidy amount to the customers’ bank account. Within a month, the government reimburses companies for the total subsidy transferred.
Meanwhile, the government is also squeezing the LPG subsidy by allowing state companies to raise the price by Rs 2 per cylinder every month for the past two months. Besides, the government is also working on a plan to enhance private sector’s presence in LPG bottling from which state players can source refills as the country aims to add 10 crore new LPG consumers in three years. Tennessee Titans Authentic JerseyShare This