Optimizing Gas Subsidy Distribution with a Custom Software System for Households

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Kathmandu: Nepal Oil Corporation is preparing to sell LPG gas at a par price for both commercial and household use. Although the gas will be sold at a par price for both purposes, the corporation has stated that it is planning to provide subsidies for gas consumed for household use.

The corporation’s spokesperson, Manoj Thakur, stated that they have initiated the development of a software system to provide subsidies for LPG gas consumed for household purposes. According to him, the corporation has started developing the software in collaboration with Rastriya Banijya Bank to facilitate subsidies for consumers using LPG gas for household use. The plan is to integrate household users into the software system and provide them with the subsidy.

We have discussed providing subsidies to household users with Rastriya Banijya Bank,” he said. “In the discussion, it was decided to set a specific number of cylinders that a family can consume annually for household purposes and provide the corresponding subsidy amount through the software. The software development work is currently in progress.

According to spokesperson Thakur, the corporation is currently selling each cylinder at a loss of NPR 322. However, with the implementation of the par price system, the corporation is preparing to add this loss amount of NPR 322 per cylinder to the current selling price. At present, the corporation sells a 14.2 kg gas cylinder for NPR 1,910. After adding the loss amount, the price per cylinder will reach NPR 2,232.

As of today, the corporation is selling gas at a loss of NPR 322 per cylinder. While this may be acceptable for household use, it is not reasonable to sell at a loss for commercial purposes as well,” said spokesperson Thakur. “The corporation has been incurring losses because commercial users are not purchasing at the par price. To reduce this loss, we will provide gas at a par price for everyone and offer subsidies to household consumers.”

“From now on, gas will be sold at a par price, and the subsidy amount equivalent to the loss will be directly transferred to the consumers’ bank accounts for household use,” he said. “Additionally, the amount of loss incurred will be provided as a subsidy to household consumers.”

This is how the subsidy will be provided.

To provide subsidies on gas for household use, the corporation is developing software in collaboration with Rastriya Banijya Bank. Additionally, the corporation has designed a modality for distributing the subsidy. According to this modality, a family is considered to have a minimum of four members.

Additionally, consumers using gas for household purposes must have at least four family members. According to the modality, such families will be eligible to receive subsidies on a maximum of eight cylinders per year, spokesperson Thakur stated.

“A modality has been prepared based on considering a family as having four members. The software is also being developed accordingly,” he said. “Once the software is ready, the subsidy will be implemented as per this system.”

According to Thakur, to provide the subsidy, the corporation will integrate household consumers’ citizenship or national identity card details into the system. Once the system is completed, the corporation will conduct testing before implementing it.

Household users will also purchase gas at the par price, and the bill will be uploaded to the software system. Once the system approves the transaction, the subsidy amount will be transferred to the respective consumer’s account.

When will the subsidy distribution begin?

Speaking at the event organized on the occasion of the corporation’s 55th anniversary on 10th of Jan, Industry, Commerce, and Supplies Minister Damodar Bhattarai stated that the practice of providing subsidies on gas consumed for household purposes would be implemented within the month of Jan/Feb.

“Previously, subsidies were provided for gas consumed commercially,” Minister Bhandari said. “The corporation had to spend NPR 11 billion for this. Now, with subsidies being provided for household purposes, NPR 9 billion will be the corporation’s expenditure.”

He stated that providing subsidies for household purposes would benefit both the corporation and the consumers, compared to commercial purposes. Accordingly, the corporation has now taken the initiative to implement this subsidy process, according to spokesperson Thakur.

“The minister has made significant efforts to ensure subsidies for gas consumed for household purposes. Under his direction, the corporation has taken the initiative,” he said.

He stated that it will take about a month for the software to be developed, and once completed, it will be tested and implemented. He also mentioned that the process for distributing such subsidies will begin by the end of Feb/ March.

What is the consumption?

According to the 2022 census data published by the National Statistics Office, 44% of the population uses gas for household purposes. Currently, there is no data available on how much gas is consumed for household purposes and for commercial purposes.

According to the corporation, the annual consumption of LPG gas ranges from 450,000 metric tons to 500,000 metric tons.

In the fiscal year 2019/20, 449,063 metric tons of gas were consumed. Compared to 2019/20, the consumption increased by 6.4% in the fiscal year 2020/21. In 2020/21, 477,752 metric tons of gas were consumed.

Similarly, compared to the fiscal year 2020/21, the consumption increased by 12.2% in the fiscal year 2021/22. In 2021/22, 536,028 metric tons of gas were consumed.

Compared to the fiscal year 2021/22, there was a 4% decrease in the fiscal year 2022/23. In the fiscal year 2022/23, 514,717 metric tons were consumed, and in the fiscal year 2023/24, 524,274 metric tons were consumed. In 2023/24, consumption increased by 1.9%.

Source: Ratopati