Gas Must Be Privatised

New Delhi: May 30, 2008: 0700hrs
Cooking gas prices are set to rise by up to 50 rupees a cylinder. The government, which is a monopolist in this area, claims that its subsidy bill is too large. This is the news today.

Yet, I wonder...

Cooking gas in India is never piped – as it is anywhere else in the world. Thus, the biggest "cost" must be transportation – nothing else.

Travel on any “notional highway” in India and you will invariably come across massive gas tankers ferrying LPG.

Travel in any city or town and you will find trucks, tempos and even cycles ferrying gas cylinders about.

If gas was piped, these transport costs could be saved – and the consumer would gain.

But that requires competition – for which there must be privatization.

Only a private entity taking a long-term view would invest in pipes to carry gas.

A government monopoly would never do that because of the “short-sightedness effect” that politicians suffer from. Because they are elected for short terms, politicians invariably invest public money where there are immediate gains – but heavy long-term costs. They never put the money where there are big costs now, but huge gains long-term. This is why they invest in flyovers but not in modern ring roads that are grade-separated.

Ever since the days of “Gaslight” in London, which used coal gas, private entrepreneurs have found it preferable to pipe gas to their customers.

There is no part of the world that I have visited where cooking gas is transported in cylinders to the final customer.

Therefore, when Manmohan pyarey talks about “lowering the subsidy” on cooking gas, shout for privatization. There is no real subsidy here. Instead, there are political clients engaged in transportation deals.