New Delhi: The Ministry of Petroleum and Natural Gas has proposed a new policy for the allocation of kerosene oil to states. It has floated a draft in this regard on April 7 and has sought comments from stakeholders within 15 days. With concerted efforts to replace kerosene oil, which is a polluting fuel, with relatively cleaner alternatives, the demand for the fuel has reduced significantly over the past few years, the Petroleum Ministry says in the note. “… 20 States/UTs may not require regular annual SKO allocation,” said the ministry.
Therefore, there was a need to re-look at the existing policy for allocation of Superior Kerosene Oil (SKO) to states and Union Territories (UTs). Under the existing policy, kerosene oil allocation to states is done under two categories: Public Distribution System (PDS) subsidised SKO for cooking and lighting purpose and non- subsidised SKO for fisheries, mela, exhibitions, pandemic, calamity etc.
Since 2016, the government has progressively reduced the subsidy on kerosene by allowing Oil Marketing Companies (OMC) to increase rates. Since 2020, the PDS price of kerosene is revised in tandem with the benchmark international oil prices. Since the price is now linked to market rates, the government feels there is no need to continue the allocation of kerosene oil to states under two categories.
The government has proposed that the allocation be made under a single category — “PDS SKO Allocation to States/UTs.” This policy will be applicable for a period of three years, from FY 2025-26 to 2027-28. “For a financial year, States/UTs will be allocated PDS SKO equal to the highest annual uplifted quantity of both PDS Subsidized SKO and PDS Non-Subsidized SKO during the last three years,” says the draft policy note.
The allocation will still be made on quarterly basis, as was being done earlier. To discourage the practice of states not lifting the allocated quantity of SKO, the Petroleum Ministry has proposed that no carry forward of the unlifted quantity of SKO to the subsequent quarter would be allowed under the new policy for states and UTs, except in the case of exigencies like natural calamities.
“The States shall have liberty to sub- allocate PDS SKO for cooking and lighting or for special needs (fisheries, mela, exhibitions, pandemic, calamity etc.) based on their specific requirement,” says the draft. The Petroleum Ministry said that the policy may be reviewed after a period of three years.
According to the Petroleum Ministry, currently, 20 states in India do not require kerosene — Andaman and Nicobar Islands, Andhra Pradesh, Chandigarh, Dadra and Nagar Haveli and Daman and Diu, Delhi, Goa, Gujarat, Haryana, Himachal Pradesh, Jammu and Kashmir, Ladakh, Lakshadweep, Madhya Pradesh, Nagaland, Puducherry, Punjab, Rajasthan, Telangana, Uttar Pradesh and Uttarakhand. Kerosene is largely used by ration card holders for cooking and lighting purposes. However, its consumption has reduced significantly with the government distributing free LPG connections under Pradhan Mantri Ujjwala Yojana (PMUY). According to Petroleum and Planning Analysis Cell’s (PPAC) data, kerosene consumption has gone down by about 77 percent between 2021-22 and 2023-24.