RIL seeks removal of LPG cap

RIL plea comes following a Central govt notification that the Reliance Gas brand to restrict its own marketing of domestically produced LPG to 10,000 tonnes per month


As per the ministry’s order, RIL sells the LPG produced at its two refineries at Jamnagar, Gujarat, to public sector retailers. Photo: Reuters
As per the ministry’s order, RIL sells the LPG produced at its two refineries at Jamnagar, Gujarat, to public sector retailers. Photo: Reuters

Mumbai: Mukesh Ambani-led Reliance Industries Ltd (RIL) has requested the petroleum ministry to remove the cap on the quantity of liquefied petroleum gas (LPG) that the company is permitted to sell through its own parallel marketing channel, two people aware of the development said.

In a notification on 29 July 2015, the ministry had directed RIL, which sells LPG cylinders under the Reliance Gas brand, to restrict its own marketing of domestically produced LPG to 10,000 tonnes per month.

“RIL has approached the ministry requesting them to remove the cap of 10,000 tonnes per month altogether, said the first person mentioned above—an official from an oil marketing company who declined to be identified.

Although the ministry has not heeded RIL’s request so far, there are continuous follow-ups by the company, the person added.

RIL did not respond to an email questionnaire sent on 27 December.

As per the LPG Control Order on regulation of supply and distribution, issued by the petroleum ministry in 2000, all cooking gas produced domestically must be supplied to state-run oil marketing companies—Bharat Petroleum Corp. Ltd (BPCL), Hindustan Petroleum Corp. Ltd (HPCL) and Indian Oil Corp. Ltd (IOC).

As per the ministry’s order, RIL sells the LPG produced at its two refineries at Jamnagar, Gujarat, to public sector retailers. However, under a Parallel Marketing Scheme (PMS), private companies are allowed to import and market LPG to bulk consumers.

In July 2016, RIL launched its small-capacity 5-kg cylinders, which qualify as free trade LPG (FTL). This means they are not subsidised by the government, unlike the commonly used 14.2-kg domestic cylinders.

The larger capacity cylinders are sold at market price to consumers who have the option of receiving a government subsidy in their bank accounts. Private firms are not entitled to government subsidies, unlike state-run oil marketing companies, and have to sell fuel at market price.

But with the government’s bid to restrict the volume of subsidy by barring consumers earning more than Rs10 lakh per annum from taking advantage of subsidised LPG, an attractive market for LPG has opened up to private players such as RIL.

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