Pressure is mounting on the Government to raise the retail price of subsidised domestic LPG, diesel and kerosene.
There is a strong buzz in the Petroleum and Natural Gas Ministry that if political consensus is there, prices of these products will be increased.
According to sources, a proposal to increase the price of subsidised domestic LPG by almost Rs 100/cylinder is under consideration. Whether this will be done in a phased manner or at one go is not yet known.
At present, the Government has capped the number of subsidised domestic LPG cylinders for each household at six a year. In Delhi, a cylinder costs Rs 410.50. There have been demands to raise this cap to nine. But the Finance Ministry, according to sources, has declined to shoulder the subsidy burden of three additional cylinders. To neutralise this loss (to be incurred by public sector retailers), the price hike has been proposed, sources said.
Kelkar panel suggestions
For diesel and kerosene, the proposal is to follow the Kelkar Panel recommendation, which suggested raising diesel price by Re 1 a litre every month for the next 10 months. On kerosene, the panel suggested a Rs 10/litre hike in phases over two years.
For diesel, the Petroleum Ministry, it appears, has suggested a Rs 1.5/litre hike a month till March 31, 2013. Another suggestion, according to reports, is to increase the price in such a way that the losses incurred by public sector oil retailers for selling it at controlled rates get neutralised.
Sources said the Petroleum Ministry had sent a proposal to the Finance Ministry and also circulated a Cabinet note in this regard. Indications of rationalising the energy prices have been coming from various Government quarters. In fact, recently Prime Minister Manmohan Singh reportedly pushed for phased rationalisation of energy prices to bring these in line with international prices.
Effective January 1, public sector oil companies have been losing Rs 10.16 a litre on diesel, Rs 32.17 a litre on PDS kerosene, and Rs 490.50 for every 14.2 kg subsidised domestic LPG cylinder. The price of petrol and diesel are reviewed by oil companies on fortnightly basis, while that of LPG and kerosene is done on monthly basis.