Indian ambassador says removal of LPG and Kerosene subsidy was a ‘miscommunication’ with IOC

The Indian ambassador to Bhutan VP Haran said the abrupt removal of the subsidy by the Indian Oil Corporation (IOC) effective from July 1 was due to a ‘miscommunication’ between the Ministry of External Affairs (MEA) and IOC.

IOC had earlier sent a letter to the Government of Bhutan on June 28 stating it would be removing the LPG and Kerosene subsidy based on the instructions of MEA.

The Indian ambassador said, “We were interested to find out how the subsidy element jumped from 33 crores in 2011 to 52 crores in 2012, which is a huge jump of 66 % when

point grievances during their between 2010 and 2011 it jumped from only 32 crores to 33 crores. This got us worried. We had wanted IOC to check why it was happening. Instead, I think there was some miscommunication and IOC issued that letter and cut the subsidies.”

He said that the MEA had definitely communicated with IOC on the issue, but the intent of the letter was misunderstood.

He said that this comes in the backdrop of Bhutan reaching the 10th plan limit of the Nu 15 bn or 1500 crores subsidy given for Kerosene, LPG, Excise Duty, etc., with the disbursement of the Nu 3 bn Excise Duty for 2011 and 2012.

This is separate from the Nu 34 bn received as grant for the 10th plan and the grant for the hydro power projects.

He said that in addition to the subsidy budget for Bhutan running out, the sanction for the cabinet assistance to Bhutan for the 10th plan had also run out in June 30, 2012, and there was no further sanction from the cabinet for an additional subsidy.

The ambassador said that after the abrupt and unintended withdrawal of subsidies by the IOC, the MEA officials had scrambled to find out what happened until the truth came to light.

The ambassador said that as soon as a new government is in place, the Government of India (GoI) would like to discuss the issue of not only subsidies but also bilateral assistance for the 11th plan.

Earlier on July 2, the chief advisor of the Interim Government had written to the MEA minister Salman Khurshid on the subsidy issue.

The ambassador said, “The MEA minister responded on July 12 and I went to deliver the letter to the chief advisor. The letter essentially says that we are looking forward to holding discussions for a fresh bilateral assistance package for the 11th plan including subsidies with the new government.”

He said that they were looking forward to the early discussions with the new government, and in the meantime, Bhutanese officials could explain why there was this sudden spurt in import of LPG. “Once they have explained it to us, it can contribute to substantive

discussions and a way can be found out,” said the ambassador.

He said that technical matters like the 10th plan funds being exhausted and non approval for the 11th plan funds was because the GoI did not have any discussions with the new government and the plan is yet to be finalized.

He said the GoI was keen to send a team to discuss the remaining funds for the 10th plan with the new government along with the 11th plan and the subsidies.

Meanwhile, the ambassador dismissed reports in the Indian media that the withdrawal of subsidies was linked to the state of Indo-Bhutan relations.

“All I want to convey is that it has nothing to do with the elections and there is no political message intended in it, which was made clear in the MEA’s minister’s letter to the chief advisor and we look forward to working with the new government of Bhutan in finalizing the 11th plan assistance which will include subsidies,” said the ambassador.

When asked for his views on politicization of the Indo-Bhutan debate in Bhutan’s election process the ambassador said, “First, this is an internal political matter and I would not like to comment. Secondly, we did have some concerns, but these concerns were frankly shared with the government at the time. So even between the best of friends, there are some differences and problems but we convey this through dialogue and discussion, not through other means.”

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