New Delhi: The facility provided by government owned companies to avail free-LPG connection on loan for the beneficiaries to be able to buy cooking gas refills is proving boon for consumers. With the soon to be held elections in the view, the companies have deferred recovery of loans.

As under the scheme, more than 3.6 crore poor women benefited by taking free LPG connections since June 2015. The scheme avails the benefit of Rs. 1,600 cost of LPG connection being borne by the government and cost of buying LPG stove and refill (gas cylinder) was to be borne by the beneficiaries. In a bid to help poor people get the connections, the firms provided loans based on interest-free policy to fund the total cost of LPG stove and refill to beneficiaries.

“Keeping in line with the spirit of Pradhan Mantri Ujjwala Yojana (PMUY) scheme and the country’s goal to achieve universal LPG penetration by 2022, oil marketing companies (OMCs) have announced today to defer recovery of loan amount from Ujjwala beneficiaries for next 6 refills starting from April 1, 2018,” Indian Oil Corp (IOC) stated.

The statement issued by the corporation did not go into details citing reason about the deferment of loan recovery or the cost of suc a decision. But experts are of the view that the companies assessed the situation that most of the beneficiaries of Ujjwala scheme were not willing to buy refills even after getting free connection and availing the loan facility, the scheme would have completely failed. With the elections to be held very soon, the recovery of loans has been deferred.

According to IOC, almost 70 percent of the total PMUY customers availed loans based on interest free scheme which was provided by OMCs for the financing of LPG stove and/or first LPG cost.

In order to recover the loan, the oil companies were taking the subsidy which government provides to all LPG consumers.

“Under the scheme, OMCs are recovering the subsidy amount provided on subsequent refills from beneficiaries who have taken loan and adjusting the same towards the repayment of the loan. Hence 70 per cent Ujjwala beneficiaries purchase refills at market price until their loan is paid back,” IOC said in a statement.

“Paying the market price for the initial few refills is an additional hurdle that was coming in the way of their shift towards cleaner fuel, resulting in periodic slips back to biomass,” it further said.

Getting into the details of the deferment of loan recovery, IOC further said that the scheme shall be applicable for all the existing PMUY LPG connections who have already taken loan for stove and/ or first LPG cost from OMCs.

All PMUY consumers who have outstanding loan as on the date of March 31, 2018 will have a deferred recovery for the outstanding amount up to 6 LPG refills.

“All new consumers who will be enrolled after April 1, 2018 will also have a deferred recovery of the outstanding loan amount up to 6 LPG refills,” it added.

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