The Hindu : New Delhi News : LPG, kerosene prices may go up

Online edition of India's National Newspaper
Friday, Aug 13, 2004

New Delhi

New Delhi

LPG, kerosene prices may go up

NEW DELHI, AUG. 12. The Government is considering raising the prices of domestic cooking gas LPG and kerosene in phases from October to cover up for the un-recovered cost on the current selling price.

The Government proposal to raise the prices of domestic cooking gas and kerosene in phases from October is to cover up for the un-recovered cost on the current selling price.

On the table is the raising of LPG prices by Rs. 4 a cylinder every month or Rs. 12 every quarter from October to cover the Rs. 112.80 a cylinder under-recovery arising from the steep rise in the cost of raw material and a cut in government subsidy, official sources said.

Kerosene prices may be raised by Rs. 0.20 a litre every month or Rs. 0.60 a litre every quarter from October 2004 to cover for the Rs. 8.30 a litre loss public sector oil firms are suffering on the mass-cooking fuel.

Sources said the proposal was believed to have been mooted by the Cabinet Secretary, B.K. Chaturvedi, who as Petroleum Secretary earlier had made a strong case for periodic revision in LPG and kerosene prices just like those of petrol and diesel. His idea was to make people used to price changes with the revision in cost.

Besides, the Government is also contemplating a duty cut on LPG and kerosene to rein in the runaway under-recoveries.

The Petroleum Minister, Mani Shankar Aiyar, has proposed to bring down excise and customs duty on LPG and kerosene to zero.

``The duty cut will have a sobering effect of the spike in international oil prices on the domestic market,'' they said.

Mr. Aiyar suggested that customs duties on LPG and kerosene be brought to nil from the current 10 per cent to control the domestic prices. ``Considering that the Government subsidy on kerosene and LPG is most inadequate, the duties on these subsidised products need to be reduced.''

``Levying excise duty on subsidised products is anomalous. These products may therefore carry nil excise duty as is the case for naphtha used by the fertiliser sector,'' Mr. Aiyar wrote to the Finance Minister.

Mr. Aiyar had prevailed upon the Finance Ministry to extend the phasing out of government subsidies on LPG and kerosene to 5 years instead of 3 years. The subsidies on the two fuels were to expire this fiscal end.

According to the revised schedule, the government's subsidy outgo on LPG and kerosene will be Rs. 4567 crore in 2004-05, Rs. 3258 crore in 2005-06 and Rs. 1749 crore in 2006-07.

PTI

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