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. Businessmen must also be careful in setting up conversion workshops because many have lost investment by setting up such conversion workshops for CNG as its prices started to shoot up after initial thrust beginning from 2005. 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 and their maintenance. It has also moved to encourage the use of LPG by automobiles. As per the policy, the government will regulate LPG prices for automobiles. Under the policy, the authority concerned will provide approval for installing auto-gas stations and conversion workshops after obtaining license from the Department of Explosives. Only then the licensee may build gas station and conversion workshop within 12 months.
It appears that using LPG in vehicles is cost-effective compared to octane and petrol, but costlier than CNG which is currently used mostly in motor vehicles. In our view the use of LPG is becoming inevitable over time but the government can keep the impact at low by regulating its cost for motor vehicle users. High cost fuel for transport will be critical for transport sectors. It may also push inflation up.
