BPCL Cooking Gas Customers to Continue to Receive Subsidies, Following Privatization, Energy News, ET EnergyWorld



New Delhi: Bharat Petroleum Corporation Ltd (BPCL) has created a separate platform for its cooking gas operations which operates the government subsidized LPG cylinder program where the subsidy amount is transferred directly to consumer accounts.

The creation of a separate platform was mandated as part of the sale process to exclude new owners from this subsidy program which could operate without interruption, with the government transferring subsidies to consumers even after the privatization of BPCL.

The government sells its entire 52.97% stake in BPCL to a strategic investor. There were doubts among potential bidders as to how the subsidized cooking gas program would be managed after the transfer of management of BPCL to new private sector owners. If companies were to take note of the subsidy, it would change BPCL’s valuation.

It has now been decided that cooking gas customers will continue to receive subsidies in their bank accounts after the privatization of the PSU oil refiner. The government has clarified that the current system in which the oil companies pay the subsidy amount and the government reimburses these payments will continue.

Creating a separate platform would help separate subsidized cooking gas operations. This will allow the identification of beneficiaries and the transfer of the grant without confusing the scheme for the new owners.

The price of LPG for cooking consumers under PAHAL is subsidized by the government, the amount of subsidy given to consumers of PAHAL (Pratyaksha Hastaantarit Laabh) through DBT is the difference between the determined price by the market and the subsidized price.

Private oil companies such as Reliance, Nayara Energy do not receive any government subsidy for cooking gas. Thus, if these companies sold domestic LPG cylinders, they would be billed at market prices.

The government has allocated 12,995 crore rupees as an oil subsidy for fiscal year 22, a drastic reduction from the 40,000 crore rupees provided the previous year.

Regarding BPCL, the government hopes to solicit price offers from potential investors in the near future. In addition to Vedanta Group, two American funds – Apollo Global and I Squared Capital – have submitted their expressions of interest (EoI) for BPCL.




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