New Delhi, June 22, 2014: Domestic LPG price may see a hike of Rs 10 per cylinder if the government decides to accept “strong” recommendations made by the Petroleum Ministry to offset the rising fuel subsidy burden.
The news is equally bad for piped cooking gas consumers. A decision on increasing the price of natural gas is expected as early as this week.
Discussions are at an advanced stage with Prime Minister Narendra Modi accelerating the pace of meetings with oil and finance ministers.
Every dollar increase in gas price may lead to Rs 1.89 per standard cubic metre hike in piped cooking gas price.
If the government accepts to bite the bullet, this will be its second major step after the increase in the railway fare and freight charges and may trigger a chain reaction as it may push prices of food, power and fertiliser, among others.
At present, the government incurs a loss of Rs 433 on a domestic subsidised cylinder meant for household kitchen. The Rs 10 hike will save it Rs 7,000 crore on fuel subsidy bill.
“Iraq crisis has posed a fresh challenge to the new government and there may not be any other way out than increasing prices of fuels,” an official told Deccan Herald.