CSR kitty of oil companies to subsidize gas for rural poor

With an aim to provide clean fuel to rural India, the finance ministry has approved the oil ministry’s proposal to provide extremely subsidized cooking gas connections to over seven million poor families in rural areas.

The subsidy will be shared equally between the government and the state-run oil companies, which are expected to leverage their funds for corporate social responsibility (CSR).

Public sector oil companies, including Indian Oil Corp (IOC), Bharat Petroleum Corp (BPCL) and Hindustan Petroleum Corp (HPCL), mandatorily spend two per cent of their net profit on CSR activities. Now, a chunk of it will go in subsidizing the cooking gas. Their combined annual CSR fund is estimated between Rs 800 crore and Rs 1,000 crore.

‘Connections will be given for just Rs 635 per unit. A subsidy of Rs 1,400 – waiving security deposit of Rs 1,250 and Rs 150 for the regulator – per connection will be provided to each household. The target of reaching out to seven million household is expected to be achieved in two years,’ minister of state for petroleum and natural gas Jitin Prasada told The Economic Times.

‘This is part of our policy to provide clean fuel to the rural people who still depend on firewood or kerosene for cooking purpose. Apart from health benefits, the clean fuel will also help in protecting the environment,’ Prasada said.

The move will also help the government in subsequently reducing supply of highly subsidized kerosene, which is often misused for adulterating costly fuels like diesel.