Govt not reimbursing money paid for LPG direct subsidy: Oil cos

As the government claims success of direct subsidy transfer on cooking gas, Indian Oil Corporation has said oil firms have not been reimbursed cash they have been transferring to consumers since launch of the scheme on June 1.

IOC and other oil firms have been paying LPG consumers in 54 districts up to Rs 500 to help them buy a 14.2-kg cooking gas refill at market price, which is more than double of Rs 410 per bottle rate in Delhi.

But as the government extends the scheme to 289 districts from January 1, IOC said oil firms have not been paid for the subsidy they extend to consumers on the government's behalf.

"So far, OMCs (oil marketing companies) have already spent almost Rs 188 crore (Rs 1.88 billion) towards cash transfer under the Direct Benefit Transfer of LPG scheme," IOC Executive Director A N Jha wrote to the Oil Ministry on August 21. Since then, the amount disbursed has risen to Rs 222 crore (Rs 2.22 billion), none of which has been compensated by the government.

When the scheme is rolled out in a district, Rs 435 is deposited in bank accounts of household LPG consumers as advance to help them purchase LPG cylinder at market price.

The moment the consumer buys the first refill, a cash subsidy at the prevailing rate, which can be up to Rs 500,

is transfered and the cycle continues.

Citing the May 20 decision of the Cabinet Committee on Political Affairs, IOC said the approval for DBTL states that the first advance will be provided by oil companies but they have not received any fund for the same till date.

"You will appreciate that in absence of funds, the oil companies shall be severely strained to sustain the cash transfers and will eventually com to a breaking point in case funds are not replenished as envisaged in the scheme," Jha wrote.

IOC wanted previous claims to be settled before expanding the scheme to more districts.

The government plans to extend DBTL to 289 districts by Janaury 1, covering almost all the state capitals and more than half of the 14 crore LPG consumers in the country.

When extended to 289 districts, an estimated Rs 27,000 crore (Rs 270 billion) will be transfered to consumers through DBTL in a year.

The DBTL in 54 districts currently covers 21.9 million LPG consumers and as much as Rs 222 crore (Rs 2.22 billion) subsidy has been transferred through 5.3 million transactions into the bank accounts of the LPG consumers so far.