Gas Price Hike Deferred by Three Months
The Cabinet on Wednesday decided to maintain status quo on prices of domestically produced natural gas for three months. The deferment of gas price hike, originally due for April 1, is likely to impact shares of state-run explorer ONGC and billionaire Mukesh Ambani controlled Reliance Industries, when markets open tomorrow.
"Comprehensive discussions are required on this issue," said Oil Minister Dharmendra Pradhan.
Gas price was set to double from the current $4.2/unit from April 1, but was not implemented by the UPA government because of ongoing elections. The UPA government's decision to double gas rates to $8.4 per unit was based on the Rangarajan formula. The Bharatiya Janata Party (BJP) had promised to review the formula during the election campaign.
A rise in gas price would have impacted prices of electricity generated from gas-fired power plants and many other types of fuels such as CNG and PNG (cooking gas).
The status quo means the government has got a temporary respite from inflationary pressure at a time when deficient monsoon and rising crude prices threaten to stoke cost of essential products.
In another important development, the government clarified that there is no proposal from the petroleum ministry for any hike in LPG or kerosene prices. Earlier, media reports said the government wanted a staggered hike in the prices of kerosene and LPG to reduce its subsidy burden, which cost over 2 per cent of GDP in 2013-14.
(With agency inputs)
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