Indian Oil stops new LPG connections
31 July 2008
Top fuel retailer Indian Oil Corporation says it has temporarily halted providing new domestic cooking gas LPG connections since April, in a bid to stem rising losses from fuel subsidy.
Acording to reports this stoppage has led to 200,000 consumers being in the que for new connections because it did not have working capital to service new consumers.
Speaking to reporters in New Delhi, Indian Oil chairman Sarthak Behuria said that the oil retailer had not bought new cylinders for almost a year due to a cash crunch and did not have equipment to meet the demand for new connections. (See: PSU oil marketing companies propose fuel rationing, halt to new LPG connections) and Subsidies driving top oil companies bankrupt)
IOC says it loses Rs338.53 on sale of every 1a 4.2kg LPG cylinder amounting to a daily los on the cooking fuel to Rs33 crore.
The company also also resorted to measures to improve its working capital including asking dealers to pay for supplies in advance and stopping consumer credits and to restrict diversion of subsidised domestic LPG for commercial use, Behuria said.
Subsidised domestic LPG cylinders are often diverted to hotels, industrial users and automobiles, which are supposed to pay market prices.
IOC, which has 56 per cent of the over 9.8 crore LPG consumers in the country, is projected to lose Rs1,21,015 crore on sale of petrol, diesel, domestic LPG and kerosene in the current fiscal as government has not allowed it to raise retail prices in line with rise in cost.