The Telegraph
Since 1st March, 1999
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Cooking gas likely to cost more

New Delhi, Jan. 3 (PTI): Petroleum minister Ram Naik today indicated that prices of domestic cooking gas (LPG) may be raised before the budget to check growing subsidies but said consumer interest will be kept in mind while taking any such decision.

“The international price of crude oil as well as imported LPG have gone up substantially. We import 70 per cent of our requirement, so there will be some revisions. It has to be decided by the Cabinet,” Naik said.

Under the flat rate subsidy scheme, the finance ministry has pegged subsidy on LPG at Rs 71 per cylinder, which falls short of the average import parity price by about Rs 50-60 per cylinder.

Similarly, subsidy on kerosene for public distribution system (PDS), the subsidy elements has been pegged at Rs 2.57 per litre, about Rs 1.50 per litre short of import parity price. The spike in crude oil prices already had its bearing on petrol and diesel prices, which have been raised by about Re 1 per litre from today.

Naik declined to quantify the hike expected in LPG prices but said “consumer sensitivity and interest will be kept in mind.”

“In June, the government had cut excise duty on petroleum products by 2 per cent to check excessive volatility in global oil prices. This time too there is excessive volatility and we are considering all options,” he said.

Naik declined to comment about the discussions his ministry had with the finance ministry. However, highly placed sources said the ministry did not agree with the petroleum ministry's contention for a subsidy of Rs 87 per cylinder for LPG and Rs 3.50 per litre on kerosene.

“The finance ministry refused to accept the import parity pricing principle for LPG as it felt prices in the West vary seasonally (high during winter), a trend not observed in India,” they said.

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