Ordering supply of old LPGs two decades that limit the supply of LPGs produced domestically for only state-owned oil companies have a reliable plan to enable Bharat Petroleum Corporation Ltd (BPCL) to continue the sale of subsidized cooking gas (LPG) after privatization.
Legal opinion has now been sought to ensure that the privatized BPCL will be eligible to receive liquid oil (LPG) produced by companies such as ONCC and Gail, two government officials with knowledge of these developments. At present, BPCL has more than 8.4 domestic LPG customers, including 2.1 Crore Ujwala customers. The company does not produce enough LPG at refineries to be able to meet all this needs.
It, like other oil marketing companies, buy LPGs from state-owned companies such as oil and gas (ONGC) and Gail (India) Ltd and private companies such as Reliance Industries Ltd. Liquid oil gas (supply regulation and distribution) orders, 2020, known as the 2000 LPG control sequence, limit the sale of original cooking gas produced only for state-owned oil marketing companies Corporation Oil Oil (IOC), Hindustan Petroleum Corporation Ltd (HPCL ) and BPCL.
This limits the supply of LPG produced by companies such as ONGC and Gail to private companies. Private LPG retailers, called parallel marketers, must use import gas to supply to customers. The 2000 control order was issued because the nation was short in the production of LPG.
After BPCL was privatized, the order 2000 would make Ongc and Gail from selling LPG to BPCL, officials said. “Install the divestment of government shares at BPCL, it will stop being a government oil company in terms of paragraph 2 (g) the sequence of LPG control in 2000,” said an official.
Without accidentally access to LPGs, BPCL will not be able to serve customers and it is impossible to shift customers to IOC and HPCL as LPG cylinder equipment at the end of the customer needs to be changed. Also, the IOC and HPCL may not have the infrastructure needed to serve a large customer base, officials said. As a way out, it is being considered to continue to treat BPCL as a government company for the purpose of the 2000 control order for three years, officials say adding that legal opinions have been sought to ascertain whether such steps are pressed by law.
Another alternative is to change the LPG control order itself to allow private companies to access LPGs that are produced accidentally. This will open the retail LPG to other private companies. Officials said the Ministry of Law’s opinion was sought to determine whether the term government oil company in the LPG control order needed demanding companies to become a government company and if the Privatization of Post BPCL can be notified as a government oil company.
To interpret the term ‘government company’, the opinion of the Ministry of Corporate Affairs (MCA) and the Ministry of Consumers (Moca) has been searched, they said. MCA because it was the Ministry of Administration for the administrative purpose of the Act Company, 2013 and Moca because it was the administrative / department ministry for the administrative needs of the Essential Commodity Act, 1955, where the 2000 LPG control was issued.
Officials said the new BPCL owner would be after three years of takeover to get the right to decide to maintain the subsidized LPG sales business. LPG gas cooking companies will be transferred to IOC and HPCL if the new owner does not want to continue the business like that, officials added.
The government provides 12 cooking gas cylinders (LPG) 14.2 kg each to households in a year with subsidized rates. There are no subsidies paid in most countries but subsidies will be directly paid into the user bank account in terms of prices up sharply. The government sells all 53 percent of shares along with management control at BPCL.
