Seven million poor to get cheap gas connections

from The Economic Times of India

by Rajeev Jayaswal

New Delhi (13 Oct. 2010) — THE finance ministry has approved an oil ministry’s proposal to provide cooking gas connections to over 7 million poor families in rural areas for just Rs635 per unit, a senior government official said.

“A subsidy of Rs1,400 per connection will be provided to each households and the target will be achieved in two years ,” minister of state for petroleum & natural gas Jitin Prasada told ET.

The proposal is expected to get the Cabinet’s nod later this month. The subsidy will be shared equally between the government and state-run oil companies, which can leverage their funds for corporate social responsibility (CSR), he added.

Public sector oil companies, including Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL), mandatorily spend 2% of their net profit on CSR activities. Their combined annual CSR kitty is estimated between Rs 800 and Rs 1,000 crore. The government will waive off the one-time security deposit of Rs1,250 for the connection and Rs 150 for the regulator. The beneficiary will pay about Rs635 per unit for other services, including the cost of a 14.2 kg gas cylinder which is approximately Rs350, an official handling the project in the oil ministry said.

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