Colour-coded LPG cylinders rescheduled for July 15 launch

The likelihood of the government’s long-planned project to use colour-coded LPG cylinders being implemented has increased after it agreed to hike the commission for dealers and transporters.

Under the scheme rescheduled to be launched on July 15, household users will also be given consumer cards entitling them to buy LPG at subsidized rates. Officials of Nepal Oil Corporation (NOC) said that preparations to enforce LPG consumer cards have been finalized. The state-owned oil monopoly is the sole importer of LPG in Nepal. LPG, or liquefied petroleum gas, is a popular cooking fuel in urban areas.

With a view to ending the subsidy given to commercial users and enabling NOC to offset its losses incurred from the LPG business, the government had enforced a dual pricing system by differentiating two classes of LPG consumers -- subsidized and non-subsidized.

NOC had planned to distribute two types of LPG user cards (red for household users and blue for industrial users) from Feb 12. However, the plan fell apart after running into a public outcry, and the government was forced to roll back the decision a day after it was announced. The plan had also aimed to end subsidies and VAT refunds for commercial users. Entrepreneurs presently receive VAT refunds on LPG. The government gives back Rs 264.67 for each cylinder purchased.

Under the proposed scheme, the government will provide a cylinder of LPG monthly to a household of four members at a subsidized rate. According to NOC, the profit earned on the sale of LPG to industrial users will be used to provide subsidies to the poor and students. “We are confident that the scheme will be implemented from July 15,” said Deepak Subedi, spokesperson of the Ministry of Commerce and Supplies. “All

the necessary tasks have been completed.” The LPG consumer card system was launched on May 2, 2012 before the plan to introduce colour-coded LPG cylinders was envisaged. The then Prime Minister Baburam Bhattarai received the first consumer card on April 17, 2012. However, both the schemes failed following differences between LPG bottling companies and the government.

On June 3, the plan was revived after the government agreed to raise the commission for LPG dealers and transporters. “With the agreement, the two parties have agreed to implement both the schemes from July 15,” said Maheshore Shrestha, general secretary of the Gas Dealers Federation Nepal (GDFN).

Meanwhile, bottling companies have also started distributing consumer cards to fast track the distribution process.

“We have also suggested to NOC to extend bank facilities through state-run banks to withdraw subsidies for the targeted group,” Shrestha said. Earlier, when NOC had implemented different pricing mechanisms for LPG, it had appointed only the Bank of Kathmandu to refund the subsidies to targeted groups. The plan was criticized by student unions and consumer rights activists.

NOC deputy director Dinesh Kumar Yadav said that around 340,000 LPG consumer cards had been computerized out of the 400,000 forms received from dealers for consumer card verification.

“We have estimated that 900,000 household cards will be required across the country. Among them, 600,000 households are based in the capital,” Yadav said. According to him, NOC has been receiving around 5,000 forms daily. Red cards will have the consumer’s citizenship number and the number of family members printed on them. Blue cards will bear the PAN number of entrepreneurs.

There are around 53 LPG bottlers and an estimated 4 million LPG users across the country. NOC currently incurs a loss of Rs 363 on each cylinder of LPG sold, or Rs 509 million monthly.

Meanwhile, the GDFN said that after the government differentiates two classes of LPG consumers, subsidized and non-subsidized, it would be more scientific to deposit the proposed subsidy amounts in the consumer’s bank account.

The GDFN said that the government should introduce the system of depositing the subsidies into their bank accounts every time they buy LPG.

“The system will prevent unintended users like commercial establishments, which have to buy LPG at the market price, from obtaining subsidised LPG,” said Shrestha. “The Indian government has also planned to launch the system from July 1.”

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