Avoid monopoly for LPG licensing

AS gas supply is shrinking at national level, the government has taken the move to slowly replace the use of CNG by LPG as a way out of the impending crisis. Consequently, the government has taken the move to give new license for LPG stations throughout the country. But as things appear many wealthy persons and big businesses are on rush to establish their monopoly in the new trade as LPG will be imported and distributed to fuelling stations. They have started lobbying for the purpose.

A national daily recently reported that businesspeople are lining up in long queue to submit applications for LPG station licenses and conversion workshops for vehicles. It is a lucrative business. Many big business houses have already started move to establish monopoly by securing as many as licenses. Applications for around 1,000 LPG re-fuelling stations across the country so far reached the Energy and Mineral Resources Division at a time when most vehicles now use CNG, which is two and half a time less costly than LPG. But the government is planning to slowly replace the use of CNG by LPG as gas reserves in the country is drying up and demand for energy is on steady rise to run vehicles and industrial plants.

Media reported that a leading conglomerate alone has applied for licenses of 500 auto-gas re-fuelling stations. Another has reportedly applied for 200 and we must say that the government must be careful that nobody can establish such monopoly to control the market. We know that the government will import LPG at a high cost and many middle-income families may not find it affordable to run a family car at such cost. Insiders in the Power Ministry said that the government would scrutinize the applications to make sure that no firm establishes monopoly. It is a welcoming move but there is also the question how the government will be able to avoid pressure from ruling party men who will set up fuelling stations or lobby for someone closer to them.
The government has already adopted country’s first-ever policy guidelines for installing LPG re-fuelling stations and conversion workshops. It has also moved to encourage the use of LPG by automobiles. As per the policy, the government will regulate LPG prices for automobiles while the concerned authorities will give license for LPG gas stations and conversion workshops. One can then set up the gas LPG station with permission of the Department of Explosives within a stipulated time.

In our view the use of LPG is becoming inevitable but the government can keep the monopolists in control by regulating its cost at affordable level. Higher cost may bring setback to the transport sector.