Private Firms Will Soon Sell LPG Cylinder (Cooking Gas) Directly To Consumers – Is This A Big Step Towards Privatization?

As per fresh news coming in, a Government panel is considering to allow private companies to enter the LPG market soon.

Presently, this market is being dominated by state-owned firms, which are Indian Oil, BPCL and HPCL, that attract customers by offering them gracious subsidies.

This will open up doors to multiple industries, who have been trying since long to gain entry into the LPG (Liquefied Petroleum Gas) market.

Read on to know all about the details of this panel and its decisions!

Should Competition Be Allowed in the LPG Market?

This committee set up by the Government consists of economist Kirit Parikh, former petroleum secretary GC Chaturvedi, former Indian OilNSE -1.14 % chairman MA Pathan, IIM Ahmedabad director Errol D’souza, and a joint secretary in the petroleum ministry.

This committee is expected to give in a report by the end of July.

A memo by the oil ministry reveals that the Terms of Reference on the marketing of the LPG set by the panel include “review the existing structure of LPG marketing in the country and assess whether competition should be allowed in the marketing of a controlled commodity which is deficient in the country.”

This holds true, as LPG is a form of conventional fuel and to make it a commodity like any other common products is a million dollar question.

The panel will also, “assess the need, if any, to liberalise government policies to increase the participation of private sector in LPG marketing in the country.”

As of now, customers are sold cylinders at market price by the state-owned firms, but the money is soon deposited in the customers’ bank accounts, which makes the gas much more cheaper than what private companies sell.

Reliance and Others Seeking Entry Into LPG Market

Reliance Industries Limited (RIL) has been a big seller of LPG, about a million customers in several states of India, but its customer base is nothing compared to the already huge and ever-increasing population of India that has been buying the cooking gas for years now.

Reliance, along with Nayara Energy and Total had requested the Government of India to bring them into the field with Indian Oil, BPCL and HPCL. they had also asked the petroleum and natural gas ministry officials to grant them permission to sell subsidised LPG cylinders.

The annual sale of LPG cylinders is as high as 20 million tonnes and more. However, 20 million customers of India do not receive any subsidy, and this is a huge opportunity for private companies to attract customers.

Should the Government allow competition to enter the LPG market? Share your opinions with us right here in the comments section!