Here is why your gas cylinder is expensive, Indians. The yardstick for pricing in most petroleum and gas producing nations is to ensure thats it is sold to its domestic consumers at lesser than the price of mineral water. This information was revealed by our tour guide in Malaysia. While we were doing rounds, we found that a litre of mineral water was priced closed Rs 40 per litre whereas petrol was priced at Rs 30. Similarly gas price was at Rs 20 per kg. In most Arab nations which are producers of petroleum products the prices are much more cheaper to its consumers.
Domestic production of gas in India has been surplus from decades; the bottle neck was availability of cylinders and storing facility. The only producer ONGC was compelled to flare up the untapped gas for want of consumption. The BJP govt in its wisdom found a novel way to issue double bottle connection to all its consumers so that at least immediately storage will be ensured at consumers cost. The current UPA govt. has ensured that surplus can be stored at MRPL facility underground and at Vizag along with crude oil. Further they have given a massive push in ensuring piped gas supplies to consumers across India.
Why should domestically produced gas price be equated to international price is the issue which is grappling the minds of consumers in India? Secondly why should a cap on cylinder eligibility per annum should be introduced? Thirdly why gas is under produced and fourthly what is the need for using private agencies to disperse gas subsidy by linking Aadhaar to the bank accounts ?
Assuming that govt is subsidising poor man’s fuel of Kerosene, there needs to be some other fuel which takes the burden, which was Petrol. Petrol production is excessive in India, considering the grade of crude extracted from its offshore wells. Diesel prices are almost on cost to cost basis. Therefore the subsidy bogey should be thrown out of the window. If the govt is serious about finding out the actual cost of gas, it would be lesser than Rs 15 per kg. The break up would be Rs 10/ for the product and Rs 5 being overheads such as investment etc. Thus the Oil producers are making 50% margin and rest is taxation on the product already.
The capping on cylinder was perfectly justified from the angle of black marketing by the gas distributor’s employees. The PSU oil companies got into the act even though late in the day to grab the opportunity to control and ration cylinders, hitherto they could not touch a gas agent because they were all highly connected with political circles. A software was developed to track the ordering and supplies by distributors, along with linkage with electrical meters. This was started by the corrupt BJP govt ironically. UPA govt took a cue and rationed gas refills to 9 per consumer. This was already informally in vogue with stipulation of booking only after 25 days and 10 to 15days for delivery of gas.
Entry of private operators into the field of gas distribution is putting a continuous pressure on the govt to equate domestically produced prices to the imported gas prices. I believe the govt has succumbed to this pressure finally. Meanwhile the private producers will reap bumper bonanza from the increased pricing. The prices have shot up from $ 2.2 to $ 8.4 per mmbtu in a span 6 years. If one keeps calculating the amount of surplus generated it will be mindboggling figure.
Finally a clever manipulation is undertaken to hike the price of gas cylinder and disperse the amount as subsidy through private intermediaries. Can you imagine Rs 3 lakh crore will be distributed as subsidy per annum if the scheme is rolled in across the country? Why should the government engage private agencies in gas disbursal is a big ethical and legal issue. If one of the agencies manipulate the disbursement process with the help of gas dealer, than the figure of the scam could run in thousands of crores. Instead why should the govt not distribute the subsidy through ONGC, GAIL, Oil India or any other Oil PSU is the prime question. Why is our PM and other Cabinet ministers keeping mum on this issue of disbursement of subsidy in baffling. I hope our PM before he demits office, cancels this potential mother of all scam.