The import and sale of kerosene in the parallel market doubled during 2002-03. However, the import and sale of liquefied petroleum gas remained static during the year.

The parallel marketing system for kerosene and LPG was introduced in April 1993 after the decanalisation of import of the two petroleum products. It was meant to facilitate their import and marketing by private players at market-related prices.

Kerosene imported and sold by the parallel marketing system almost doubled to 633,600 tonnes in April-January 2002-03 from 317,900 tonnes in 2001-02, riding the growing demand for kerosene in the industrial sector. It indicates that the system is progressing well as far as kerosene is concerned.

However, LPG imported and sold by this system rose to 418,000 tonnes in April-January 2002-03 from 338,700 tonnes in the previous year- a sign that private marketers of LPG are still struggling to make a dent in the market.

Till January 31, 2003, 121 private firms imported about 7.07 million tonnes of kerosene, while 24 firms imported about 1.25 million tonnes of LPG.

Private marketers of LPG blamed the high subsidy given to public sector oil companies selling domestic LPG for their woes.

They said nearly 30 small private firms had shut down and a few major ones like Exxon-Mobil had closed their LPG business.

Parallel marketers of LPG, who invested more than Rs 1,100 crore (Rs 11 billion) in infrastructure, bottling and marketing of LPG, after being assured by the government that a level playing field would be created for them vis-à-vis public sector oil firms, now feel cheated.

According to the roadmap prepared for dismantling the administered pricing mechanism, LPG subsidy was to come down to 15 per cent in 2000-01. However, the subsidy has increased from Rs 70 a cylinder in 1998-99 to Rs 190 a cylinder now.

Private marketers said though the international prices of LPG had shot up from $194 a tonne to $311 a tonne in 2002-03, the government had not allowed oil public sector units to raise the retail prices of domestic LPG.

In the Budget for 2003-04 the government has pegged the LPG subsidy at Rs 67 a cylinder, However, at current international prices, the subsidy comes to Rs 190 a cylinder. Oil PSUs are being made to bear the burden of an additional subsidy of Rs 123 a cylinder.

As parallel marketers have to source their LPG at international prices, they cannot match the subsidised price of the LPG being sold by PSUs.

"Needless to say, this erodes the highly price-sensitive consumer base of the parallel marketers," S K Hazra, president of the Indian LPG Industries Association, said.