Black marketing chokes LPG sales

PUNE: The sale of commercial cylinders has been dropping consistently in the last few months with oil companies attributing the fall to black marketing of non-subsidized cylinders.
Though officials refused to provide the data, oil companies are preparing to deal with the situation by blocking multiple connections where chances of diversion maximize.The Bharat Petroleum Corporation Limited (BPCL) and the Hindustan Petroleum Corporation Limited (HPCL), the biggest players in the market followed by the Indian Oil Corporation Limited (IOCL), recently blocked 8,000 connections (around 4,000 each) where consumers had applied for direct benefit transfer for LPG consumer (DBTL) even when they possessed two or more connections.
An oil company official told TOI that one of the reasons why growth in commercial LPG has been slow and not as good as last year, is the fall in sales over the last few months. "One reason could be non-subsidized cylinders being diverted to commercial use. There is some price difference between commercial and non-subsidized cylinders, the latter being cheaper. People are under the impression that non-subsidized cylinders could be used for commercial purposes," he said.
It is to prevent such black marketing that the BPCL recently identified and blocked around 4,000 connections where consumers enrolling under DBTL had LPG connections with both companies -- BPCL and HPCL. The official added that it was under such circumstances that diversion takes place.
Officials, however, said the drop in sale of commercial cylinders cannot just be attributed to diversion, and that there are many more reasons. "The slowdown in the automobile sector since last 10 months has resulted in some ancillaries shutting down. This has caused LPG's commercial sales to come down," said the official.
Another oil company official said that historically, commercial cylinder sales were very high last year due to the cap of six on subsidized cylinders. "The growth of commercial cylinders this year ranges from 3% to 5%, while it was between 20% and 25% last year after capping," he said.
A distributor said that in 2002, oil companies had given customers offers which allowed them two connections per household. "Many of these connections still remain. Moreover, in some cases, people who opted for piped LPG have still not surrendered their LPG cylinder connections. In addition, since consumers now cannot have two connections on one address, there may be cases where two family members - who are staying in one house, but have two different Aadhaar cards and two houses - may avail of two different connections. It is in such cases that the scope of diversion increases," the distributor said.
Another official said the fall in commercial cylinders could also be due to an industry slowdown, as many commercial players have shifted to CNG and PNG.