Govt seeks legal opinion if privatized BPCL will be eligible to receive LPG produced by ONGC and GAIL

A two-decade-old LPG supply order restricting supply of domestically produced LPG to only state-owned oil companies has stymied plans to allow Bharat Petroleum Corporation Ltd (BPCL) to continue selling subsidised cooking gas (LPG) after its privatisation. A legal opinion has now been sought to ascertain if privatised BPCL will be eligible to receive liquefied petroleum gas (LPG) produced by companies such as ONGC and GAIL.

Currently, BPCL has more than 8.4 crore domestic LPG customers, including 2.1 crore Ujjwala customers. The company does not produce enough LPG at its refineries to be able to cater to the requirement of all these.

BPCL, like other oil marketing companies, buys LPG from state-owned firms like Oil and Natural Gas Corporation (ONGC) and GAIL (India) Ltd as well as private companies such as Reliance Industries Ltd.

The Liquefied Petroleum Gas (Regulation of Supply and Distribution) Order, 2020, known as LPG Control Order of 2000, restricts sale of indigenously produced cooking gas only to state-owned oil marketing companies Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and BPCL. It restricts supply of LPG produced by firms such as ONGC and GAIL to private firms. Private LPG retailers, called parallel marketeers, have to use imported gas for supplying to customers.

The 2000 Control Order was issued as the nation is short in LPG production. Once BPCL is privatised, the 2000 order will bar ONGC and GAIL from selling LPG to BPCL. With no access to indigenously produced LPG, BPCL won’t be able to serve its customers and it would not be possible to shift the customers to IOC and HPCL as LPG cylinder equipment at customer end will need to be changed. IOC and HPCL also may not have the required infrastructure to cater to such a large customer base, the 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, pending legal advice.  The other alternative is to amend the LPG Control Order itself to allow private firms to access indigenously produced LPG. This would open up LPG retailing to other private firms.

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