With the Congress putting pressure on him to increase the quota of subsidised LPG, Oil Minister M Veerappa Moily on Friday said the government will "seriously consider" raising the limit to 12 cylinders a household.
Moily, who last week said there was no proposal to increase the quota, on Friday said he will consult Finance Minister P Chidambaram and move the Cabinet Committee on Political Affairs (CCPA) on the issue. The comments came after Congress MPs Sanjay Nirupam, P C Chacko and Mahabal Mishra met Moily with a petition requesting an increase in the quota of subsidised LPG cylinders to 12 per household in a year from the current limit of nine.
Chidambaram had last week stated that there were demands from "several chief ministers" to raise the quota and that the government "will look into" them. With a view to cutting its subsidy bill, the government had initially capped the supply of subsidised domestic LPG cylinders to six per household in a year in September 2012.
The annual quota was raised to nine in January 2013. Nirupam said most consumers had exhausted their quota in the first nine months of the current financial year and now have to buy LPG at the market price of Rs 1,258 per cylinder.
"There are economic justifications for restricting the supply of subsidised cylinders but the decision has affected common people. Nine cylinders are not sufficient to meet the requirement of an average household and we are demanding that this be raised to 12," Chacko said.
Officials said state-owned oil firms currently lose Rs 762.70 per cylinder on the sale of subsidised LPG and the government will have to pay higher subsidy if the quota is raised.
Moily said the nation imports 79 per cent of its oil needs and has no say in the pricing of petroleum products. "It's the OPEC nations which decide on oil pricing. They don't consider (consuming nations) interest," he said. If the government keeps retail rates low, it would have to provide huge subsidy support, which affects the foreign exchange rate and the nation's credit rating, he said.
Moily said 89.2 per cent of the population consumes up to nine cylinders in a year and only 10 per cent have to buy the additional requirement at the market price. If the quota is raised to 12, about 97 per cent of the LPG consumers would be covered by subsidised LPG, he said, adding that 69.5 per cent of the consumers use only six cylinders in a year.
Increasing the limit to 12 would result in an additional fuel subsidy burden of Rs 3,300 crore to Rs 5,800 crore for the government, he added.