The Oil Ministry has said that it will raise the cap on supply of subsidized cooking gas (LPG) to 9 cylinders per household in a year, if the Finance Ministry agrees to give an additional Rs 3,000 crore to oil companies in 2012-13. Oil Minister M Veerappa Moily met Finance Minister P Chidambaram and then held a long discussion with the head of three PSU fuel retailers for raising the cap of 6 subsidized cylinders per household in a year.
The government in September this year had decided to restrict the supply of subsidized LPG to 6 cylinders of 14.2-kg each to every household in a year. Any requirement beyond this had to be purchased at market rates which are more than double the subsidized price. Only 44% of the households in the country consume 6 cylinders in a year and the rest of them have to purchase between 3 and 6 cylinder at the non subsidized rate. This has led to furious demands from all quarters to raise the cap on supply of subsidized cylinders; keeping in view the public demand the oil ministry has asked the government to provide Rs 3,000 crore to oil companies for increasing the cap of subsidized cylinders to 9. However the finance ministry is yet to buzz on providing additional subsidy.
Oil companies are already losing over Rs 400 crore per day on selling diesel and cooking fuels below cost and bearing the cost of supplying additional subsidized cylinders will be impossible said oil ministry. Even with 6-cylinder-per-household cap, oil PSUs face an unprecedented revenue loss of over Rs 56,000 crore on sale of diesel, subsidized LPG and kerosene after taking subsidy from government.
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