LPG subsidy for BPCL consumers to continue post-privatisation: Dharmendra Pradhan

LPG customers of Bharat Petroleum Corporation Limited (BPCL) will continue to get cooking gas subsidy post-privatisation of the nation's second-biggest fuel retailers, Oil Minister Dharmendra Pradhan said on Friday.

"Subsidy on LPG is paid to consumers directly and not to any company. So the ownership of the company that sells LPG is not of any material consequence," Pradhan told PTI.

The government gives 12 cooking gas (LPG) cylinders of 14.2-kg each to households in a year at a subsidised rate. This subsidy is directly paid into the bank accounts of the users.

The subsidy is paid in advance and consumers use this to buy LPG refills that are available only at market price from dealers of oil marketing companies -- Indian Oil Corporation (IOC), BPCL and Hindustan Petroleum Corporation Limited (HPCL).

The moment a refill is bought using the subsidy, another installment is transferred into the user bank accounts.

Pradhan said the LPG subsidy payment is done digitally to all verified customers.

"Since it is paid directly to consumers, it does not matter if the servicing company is public sector or private sector," he said. "LPG subsidy will continue as before to BPCL consumers even after disinvestment."

The government is selling its entire 53 per cent stake along with management control in BPCL. The new owner will get 15.33 per cent of India's oil refining capacity and 22 per cent of the fuel marketing share.

It also owns 17,355 petrol pumps, 6,159 LPG distributor agencies and 61 out of 256 aviation fuel stations in the country.

BPCL services 7.3 crore out of 28.5 crore LPG consumers in the country.

"All these will continue to get a government subsidy," Pradhan said.

Asked if the consumers of BPCL will after some years be transferred to IOC and HPCL, he said there is no such proposal as of now.

"When we pay a subsidy to consumers directly, the ownership does not come in the way," he said.

Privatisation of BPCL is part of plans to raise a record Rs 2.1 lakh crore from disinvestment proceeds in 2020-21 (April 2020 to March 2021).

BPCL operates four refineries in Mumbai (Maharashtra), Kochi (Kerala), Bina (Madhya Pradesh), and Numaligarh (Assam) with a combined capacity of 38.3 million tonnes per annum, which is 15.3 per cent of India's total refining capacity of 249.8 million tonnes.

While the Numaligarh refinery will be carved out of BPCL and sold to a PSU, the new buyer of the company will get 35.3 million tonnes of refining capacity -- 12 million tonnes Mumbai unit, 15.5 million tonnes Kochi refinery and 7.8 million tonnes Bina unit.