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Private players may get to sell local LPG

Pradeep Puri in New Delhi | October 15, 2003 10:36 IST

In a major policy initiative, the petroleum ministry has proposed to the Cabinet that parallel marketeers be allowed to sell the indigenously produced surplus liquefied petroleum gas.

As per the current policy, the parallel marketeers can sell only the imported LPG.

The entire quantity of the indigenously produced LPG has to be sold by the public sector oil companies to the domestic consumers at subsidised rates.

The petroleum ministry's move comes in the wake of some domestic refiners seeking the government's approval for offering the surplus LPG, after meeting the domestic demand, to the parallel marketeers as an import substitution, especially during the lean season that stretches from April to September.

The surplus situation has developed on several other occasions as well when the public sector oil companies have offered to lift lesser quantity of LPG than the proposed production.

This has led to a situation where the indigenously produced LPG is being exported, while the parallel marketeers are importing this product resulting in a loss of foreign exchange to the country.

Parallel marketeers have also been requesting the government to allow indigenous LPG sale through them.

The petroleum ministry has sought Cabinet's approval to allow the sale of indigenously produced LPG (in excess of PDS demand) by producers as per their commercial considerations to parallel marketeers.

In this connection, it has asked the Cabinet to amend the LPG (Regulation of Supply and Distribution Order) 2000, to enable indigenously produced LPG to be marketed by parallel marketeers.

The Cabinet note on the issue says: "The decision will enable the producers to maximise their production and will remove one of the restrictions on the free growth of the LPG business in the country. At the same time, it will also save the foreign exchange that is being incurred by parallel marketeers on import of LPG."

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