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If the Petroleum Ministry has its way then diesel and kerosene prices may see a gradual increase.
“Based on the recommendations of the Kelkar Panel, the proposal is to increase diesel prices by Re 1 a litre every month for next 10 months. For kerosene, effort will be to raise the prices by Rs 10 a litre in phases over a period of two years,” a senior Petroleum Ministry official told reporters here.
The move to propose a price hike has come at a time when under recovery (loss due to selling below cost) of public sector oil marketing companies (OMCs) for diesel has gone up nearly Rs 10 a litre while for kerosene, it is Rs 30.93 a litre. The OMCs are partially compensated for this revenue loss by the Government by way of cash subsidy.
Last time the diesel price hike came after almost two years of the previous increase. It was raised by Rs 5 a litre in September, after an increase of Rs 2 a litre in June 2010. Kerosene price was last revised in June 2010 when it was hiked by Rs 3 a litre.
According to the Petroleum Ministry, the under recovery on sale of diesel during 2012-13 is estimated to be above Rs 1,03,000 crore while for kerosene it will be about Rs 32,000 crore.
In order to reduce subsidy on kerosene, the official said that the effort is to bring down the supply by nearly five per cent annually and replace it with LPG.
In last three years, the supply has been reduced by 20 per cent. Delhi has become the first State to be declared kerosene free where the target is to give gas connection to every kerosene using family.
LPG: The Petroleum Ministry plans to appoint 5,000 distributors for LPG to ensure better delivery of cylinders.
Although the official refused to comment on when the Government is going to increase the ceiling of subsidised domestic LPG cylinders to nine from six, he did mention about the plan to improve the distribution system.
In September, the Government capped the number of subsidised LPG cylinders to six annually for every household to reduce the subsidy burden.
He claimed that after the imposition of the cap, the supply exceeded demand and tanks were overflowing.
“Still the consumers are facing delay in getting refill. Our effort should be to provide the refill on the very same day on which the consumer makes booking,” he added.
With this intention, the plan is to appoint more distributors. An advertisement for appointing 5,000 new LPG distributors will be placed in the next 10-15 days.
“As cancelling the agency is not feasible because this will hurt the consumer, we intend to provide more and more options for the consumers in getting refill,” he added. The Government has already announced introduction of LPG portability.
The Petroleum Ministry has also requested the Finance Ministry to have just two price categories for LPG cylinders – subsidised and non-subsidised in place of the current four categories – subsidised domestic LPG, non-subsidised domestic LPG, non-subsidised domestic for charitable institutions and LPG for commercial usages.
At present, there is no custom and excise duty on domestic LPG (both subsidised and non-subsidised).
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