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BPCL customers will get LPG subsidy, post privatisation

BPCL customers will get LPG subsidy post privatisation
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New Delhi: Sell-off bound (Bharat Petroleum Corporation Ltd) BPCL customers will get subsidies into their accounts. It has a separate platform for its cooking gas operations that runs the government’s subsidised LPG cylinder scheme.

The creation of a separate platform was to isolate the new owners from this subsidy scheme that could function uninterrupted. The government would transfer the subsidy to consumers after the privatisation of the BPCL.

The government is selling its entire 52.97 per cent shareholding in BPCL to a strategic investor. Potential bidders had doubts about the post-privatization subsidised cooking gas scheme of BPCL. If companies were to take the tab of subsidy, it would alter the valuation of BPCL.

It has now been decided that BPCL customers will continue receiving subsidies into their bank accounts post-privatisation of the PSU oil refiner. The government has clarified that the present system where the oil companies pay the subsidy amount and the government reimbursed such payments would continue.

Creation of a separate platform would help keep subsidised cooking gas operations separate for the identification of beneficiaries. Transfer of subsidy to BPCL customers will not create confusion for new owners.

The government subsidizes the LPG price for cooking for consumers under PAHAL. The PAHAL (Pratyaksha Hastaantarit Laabh) consumers get it as DBT. It is the difference between the market-determined price and the subsidized price.

Private oil companies such as Reliance, Nayara Energy do not get any subsidy support from the government for cooking gas. These companies will sell domestic LPG cylinders at market rates.

The government allocated Rs 12,995 crore as petroleum subsidy for FY-22 and this is  Rs 40,000 crore less than provided in the previous year.

With regard to BPCL, the government hopes to invite price bids from prospective investors soon. Vedanta Group, two American funds -Apollo Global and I Squared Capital have submitted their expressions of interest (EoI) for BPCL.

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