CAG REPORTS. PAHAL savings: Auditor, Oil Ministry on different page in calculation

The CAG found that estimated savings on account of Direct Benefit Transfer of LPG (DBTL), or PAHAL scheme, in 2015-16 by the Ministry for Petroleum & Natural Gas was higher by about ₹4,000 crore, primarily because of differences in assumption of key variables.

Briefing media persons after the report was tabled in Lok Sabha on Friday, a Senior CAG official said that the main focus of the audit was on the information technology processes used for implementation of the DBTL.

In a report titled ‘Implementation of PAHAL (DBTL) Scheme’, the CAG stated that the Ministry had estimated savings of ₹9,211 crore by assuming an average annualised LPG cylinder consumption of 12 and average subsidy rate of ₹169.45 per cylinder.

The auditor, however, derived figure of ₹4,813 crore in savings, based on an average LPG cylinder consumption at 6.27 annually, as per the national average per-capita consumption.

However, the CAG found no discrepancies in the actual LPG subsidy savings of ₹23,316 crore during April-December 2015, as compared to corresponding period in 2014.

“The fall in subsidy payout in 2015-16 as compared to 2014-15 was a combined effect of decrease in off take of domestic cylinders, on which subsidy was paid, and the lower subsidy rates from a sharp fall in crude oil prices,” the CAG said.

“While the reduced off take of subsidised LPG, which could be considered to be an outcome of implementation of the PAHAL scheme, has contributed to savings in subsidy, its effect was not as significant,” the report added.

The CAG estimated that out of the ₹23,316 crore of LPG subsidy savings during April-December 2015, about ₹21,552 crore came from lower subsidy rates per cylinder due to fall in crude oil prices, while about ₹1,763 crore came from DBTL.

Late last month, the Ministry of Petroleum and Natural Gas late last month, the Ministry had acknowledged the importance of falling crude oil prices in the subsidy savings.

“It may be mentioned that the subsidy outgo, and consequent subsidy savings, is a result of multiplicity of factors namely – Prevailing Crude Price; Prevailing Exchange Rate; and Tax Structure in various states,” the Ministry had said.

The variation was also there in the CAG’s estimations of subsidy savings for 2015-16 vis-à-vis public sector oil marketing companies.

Oil marketing companies calculated the estimated subsidy savings for 2015-16 to be ₹5,107.48 crore by taking an average subsidy rate of ₹338 per cylinder, which was the average subsidy rate per cylinder in 2014-15.

The CAG’s view was that the subsidy rate should have been ₹169.45 per cylinder – the fiscal 2015-16 rate – which would mean the estimated subsidy savings of ₹3,473.48 crore.

On information technology processes used for DBTL, H Pradeep Rao, Deputy Comptroller and Auditor General, said: “The audit adopted risk-based sampling and selected 34 per cent of the LPG distributors, and 11.89 crore domestic consumers for further scrutiny.”

The audit did find several duplicate connections, but the CAG stated that on flagging off these issues to the public sector oil marketing companies, corrective measures were taken.

“The oil marketing companies are taking corrective action to weed out duplicate connections. In fact, some of the measures were carried out during the audit itself,” said Rao.

“We hope that the findings of the audit help the companies improve the scheme, specially on the information technology aspects,” he added.