The government is again preparing to separate LPG supplies for household and commercial users, reviving a system it has tried to introduce before but failed to implement, as recurring shortages expose weaknesses in Nepal’s cooking gas distribution system.

The latest push follows prolonged LPG shortages in Kathmandu after floods in the Bhotekoshi river disrupted supplies. Consumers were forced to queue for hours to buy cooking gas, while distributors came under criticism for holding large stocks.

The government has now formed a committee to study the use of different-sized LPG cylinders for households and businesses and recommend measures to address supply problems over the long term.

The idea is not new. In 2013, the government introduced a plan to distinguish household and commercial LPG through red and blue cylinders. Household consumers were to receive subsidised gas, while businesses would pay the cost price. The Nepal Oil Corporation issued a public notice requiring LPG sellers and consumers to follow the two-cylinder system, but the arrangement was never implemented.

An earlier effort, in 2011, involved printing consumer cards to administer LPG subsidies. That scheme also collapsed after the government changed before it could be fully implemented.

The new committee is coordinated by Jitendra Basnet, joint secretary and spokesperson at the Ministry of Industry, Commerce and Supplies. Representatives from the Nepal Oil Corporation, LPG industry and Nepal Bureau of Standards and Metrology are also members.

Basnet said the committee is examining LPG classification, storage and other measures that could provide a long-term solution to supply shortages.

“We are still in the study phase, and the classification of LPG is also being discussed,” he said. “The Nepal Bureau of Standards and Metrology has already set standards for cylinders of different sizes. We are studying practices in other countries and will reach an appropriate decision soon.”

The committee will also review previous government efforts and studies on LPG classification before concluding, Basnet said.

At present, both household consumers and businesses use 14.2-kg cylinders.

The bureau has already set standards for different cylinder sizes. It has specified 5-kg cylinders for small households, 14.2-kg cylinders for regular household use, 19-kg cylinders for medium-sized commercial establishments, and cylinders of up to 450 kg for large hotels and industrial establishments.

The Nepal Oil Corporation is also studying whether household and commercial users should have different prices and distribution systems.

The state-owned corporation incurs a loss when businesses buy LPG at the subsidised household price, said its spokesperson, Manoj Thakur. The corporation currently loses Rs411 on each cylinder, he said.

According to corporation data, commercial users account for 30 percent of LPG consumption, while households account for the remaining 70 percent.

“When we sell LPG at the subsidised household price, businesses also benefit from the lower rate, while the corporation bears the loss,” Thakur said. “If commercial users were charged the cost price, we could eliminate that loss. Other countries also have separate pricing systems for household and commercial LPG.”

Thakur said the standards already set by the Nepal Bureau of Standards and Metrology could be used to introduce separate LPG supplies for different categories of users.

But the government’s previous attempts show that changing the colour or size of cylinders alone may not be enough to establish a workable system.

In 2013, then industry minister Shankar Koirala introduced the plan to use red cylinders for household consumers and blue cylinders for commercial users. The government decided to subsidise household LPG while requiring businesses to pay the cost price.

The Nepal Oil Corporation subsequently issued a public notice making the two-cylinder arrangement mandatory for LPG dealers and consumers. Under the plan, households would use red cylinders and businesses blue ones.

The system, however, never came into operation.

An earlier effort came in 2011, when Baburam Bhattarai was prime minister, and Lekh Raj Bhatta was commerce and supplies minister. The government began printing consumer cards to administer LPG subsidies.

Consumer rights activist Prem Lal Maharjan said 8 million cards were printed at the time. But the government was replaced within a year, and the cards were neither distributed nor printed further.

Maharjan said the scheme failed because the government had decided without adequate preparation and a clear implementation mechanism.

“At the time, the Gas Dealer Federation Nepal collected Rs10 per cylinder from consumers and another Rs10 from the corporation for the cards,” Maharjan said. “Around Rs20 million was collected, but the printed cards were never distributed, no more cards were printed, and records of the card printing could not be found. This raises suspicion that the money was misused.”

“The plan was made hastily and failed just as hastily,” he said.

Shiva Ghimire, a former president of the Nepal L.P. Gas Industry Association, said the 2013 attempt to introduce separate coloured cylinders failed because there was insufficient preparation and no proper mechanism for implementing the system.

Under the plan, LPG producers were expected to prepare around 66,000 cylinders for commercial use within three months.

“But the plan failed before all the cylinders could be prepared,” Ghimire said. “We viewed the system positively because it could save the state money while ensuring that the intended beneficiaries received the subsidy. But before we could convert the cylinders for commercial use, the government’s initiative had already failed.”

Ghimire said the government should learn from those experiences before introducing separate cylinder sizes for commercial users again.

He said a different subsidy mechanism could be more practical: sell LPG to both households and businesses at the cost price, then return the subsidy directly to eligible household consumers.

“If the government tries to subsidise household consumers while requiring businesses to pay the cost price, there will be problems with classification,” Ghimire said. “The government could sell LPG to everyone at cost price and return the subsidy to eligible consumers through cashbacks based on their bank accounts. That could make the system work.”

India also uses a system under which eligible consumers receive subsidies through their bank accounts and the money is returned to them, Ghimire said.

He said safety should be given priority if different-sized cylinders are introduced for commercial users.

LPG is a highly sensitive substance, and authorities would need to strictly monitor storage facilities at commercial establishments that keep large quantities of gas, he said.

“Authorities need to assess how much gas is being stored at commercial locations, whether the storage areas are safe, and whether the necessary inspection and safety infrastructure is in place,” he said.

For large commercial establishments, Ghimire said, LPG could instead be supplied through pipelines.

“Large commercial establishments, such as hotels like the Soaltee, can be supplied with gas through pipelines,” he said. “For smaller commercial establishments, arrangements should be made based on the available space and the amount of gas that can safely be stored.”

Maharjan said proposals to use larger LPG storage systems for major commercial establishments had also been around for two decades.

He said plans had been made to install 1,000-kg-capacity bulk LPG storage tanks at five- and four-star hotels and large industries, while smaller hotels and party venues would use 450-kg cylinders.

“If that proposal had been implemented then, it would have helped the supply system considerably,” Maharjan said. “Employees of the corporation obstructed it, and the government also failed to move it forward.”

With the government once again examining LPG classification, Maharjan said the proposal should now be implemented rather than studied again.

He also argued that LPG should be classified according to its intended use in line with international standards.