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Card system in the offing to manage LP gas distribution

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Kathmandu, May 11, 2016: The government has directed Nepal Oil Corporation (NOC) to immediately introduce ‘consumer card system’ for distribution of liquefied petroleum (LP) gas.

Ministry of Supplies issued the direction last week after stakeholders – gas bottlers, dealers and consumer rights bodies – told the government that consumer card system is the best way to control black market of cooking fuel and make its distribution mechanism effective.

“We decided to implement consumer card system for distribution of LP gas as we felt that it will help to improve distribution of cooking fuel. It is also expected to control black market of LP gas in the market,” Minister for Supplies Ganesh Man Pun told Republica.

Pun said he was hopeful that the effective implementation of consumer card system would maintain transparency in LP gas industry.

Under the system, NOC will circulate red cylinders for household consumers and blue cylinders for commercial users. Household users will be sold red cylinders at subsidized rate, while commercial users will have to pay market price for blue cylinders.

However, this is not the first time that consumer card system is being implemented for LP gas distribution. NOC first introduced the system back in 2012 when it distributed around 632,000 consumer cards. The system failed because of the reluctance of LP gas dealers.

Ministry officials believe that the implementation of consumer card system would also control hoarding of cooking fuel. “As we will have record of LP gas use in all households as well as enterprises, hoarding of LP gas can be controlled,” Shreedhar Sapkota, secretary of MoS, said.

Meanwhile, officials of NOC have said that it might take some time to bring the system into implementation. “There is a need to distribute cards to consumers. However, it might take some time as we are yet to finalize the modality to implement consumer card system,” Mukunda Ghimire, spokesperson of NOC, said.

LP gas bottlers have welcomed the decision. “Earlier attempt to implement the system failed because NOC had given the responsibility to dealers. The government should assign the task to local bodies,” Shiva Ghimire, president of LP Gas Industry Association of Nepal, said.

Stakeholders say supply of cooking gas has not improved because of ineffective distribution mechanism. Though LP gas imports from India is increasing in recent months, consumers still have to queue for weeks to get gas cylinders.