The Telegraph
Since 1st March, 1999
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Poll freeze on gas, kerosene

New Delhi, Sept. 12: The government has decided to freeze cooking gas and kerosene prices for the current financial year ending in March, a period in which five states are going to the polls with the possibility of a general election in February.

The subsidy on the cooking fuel, which was to be earlier phased out in three years, will now be removed in five years.

The national oil companies have been seeking an increase in the prices of these two products in line with the declared policy of the government to tie petroleum prices to market rates.

However, political considerations have outweighed economic logic.

and public sector oil companies will continue to bear the burden of supplying the two cooking fuels to consumers at lower-than-market rates as the subsidy given by the government falls far short of the price difference.

If the government proceeds according to its policy of switching to market-related rates, the price of kerosene would have to be raised by Rs 3 a litre and of cooking gas by Rs 106 a cylinder.

To ease the burden on the refiners Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum the government has decided to make the ONGC, the producer, share the subsidy burden. The trio of refiners has been complaining that while they pay ONGC market prices for crude oil, they have to sell cooking gas and kerosene below market prices.

ONGC also supplies to these companies some cooking gas, which is extracted from natural gas produced in its fields.

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