Oil Min wants cap on LPG cylinders raised but with Rs 110 hike

LPG gas

The petroleum ministry is proposing to the Cabinet Committee on Political Affairs to raise the annual cap on subsidised LPG cylinders to each consumer to nine with a price hike of Rs 110 per cylinder.

"The price increase on subsidised LPG cylinders across the board would raise about Rs 8,000 crore which is what the differential impact would be on the oil PSUs for issuing three more cylinders at subsidised price," said an official.

The date for the CCPA meeting has not been decided yet. The ministry is yet to forward the proposal to the Cabinet Secretariat.

The ministry's proposal is in line with Kelkar Committee's recommendation which suggested last September that subsidy on LPG be reduced by 25 per cent in the current fiscal with the remaining 75 per cent removed over the next two years so as to eliminate the under-recovery by 2014-15.

However, as a populist measure, the note for the CCPA gives an alternate option of charging market rate from private firms that buy diesel in bulk from oil firms.

The Indian Express first reported on October 24 that large establishments like hotels, malls and industries paid less for diesel than individual customers, including farmers. This relief of a rupee per litre was in addition to the Rs 9.28 per litre subsidy the government bears for all customers.

Separately, another note is being put before the CCPA for raising diesel prices by Rs 10 per litre over a 10-month period with similar increase in kerosene in the next two years.

"The government is contemplating raising diesel prices by Rs 1 per litre each month for the next 10 months to bring retail rates at par with their cost," PTI quoted an oil ministry official.

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