Petroleum minister M Veerappa Moily today fueled expectations of a hike in oil prices. Speaking to reporters, Mr Moily said a decision on the revision of fuel prices will come very soon.
He added that the recommendations made by the government-appointed Vijay Kelkar-panel were being seriously considered.
The Vijay Kelkar Committee, which was appointed by the Finance Ministry to suggest a road map for fiscal consolidation, had recommended an immediate hike in price of diesel by Rs. 4 per litre, of kerosene by Rs. 2 a litre and of LPG by Rs. 50 per cylinder.
Price of diesel, which currently costs Rs. 47.15 per litre in Delhi, was last revised on September 14 when it was hiked by a steep Rs. 5.63 per litre.
Kerosene rates have not changed since June 2011 and it currently costs Rs. 14.79 per litre in Delhi.
Subsidised LPG costs Rs. 410.50 per 14.2 kg cylinder and any household requirement beyond current cap of six cylinders is to be bought at near market price of Rs. 895.50 per bottle.
Sources have told NDTV that the ministry has proposed a Rs. 3-4.50 per litre hike in diesel price and Rs. 100 in LPG rates along with raising the number of subsidised cooking gas cylinders for households to nine a year from the current cap of six.
The ministry has moved a note, for consideration by the Cabinet, proposing options for meeting a record Rs. 1,60,000 crore deficit arising from selling auto and cooking fuels below costs.
Sources said that since the Finance Ministry has refused to bear any additional subsidy arising from raising the cap on the supply of subsidised LPG, the ministry has proposed to make up for the shortfall by raising prices. It has proposed to raise LPG rates by Rs.100 per 14.2 kg cylinder in two phases to make up for a fifth of the Rs.490.50 per bottle loss being incurred currently.
The ministry has proposed quarterly increases of Rs. 50 per cylinder from April till the entire losses are wiped off.
On diesel, it has proposed a 3-4.50 per litre hike in one go or in monthly phases of Re 1 or Rs. 1.50 per litre.
From April, it wanted a Re 1-per-litre increase every month till such time that the current loss of Rs. 10.16 is wiped out.
Sources said the ministry has also proposed raising kerosene price by 35 paise a litre per month or Re 1 a litre per quarter till March 2015.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
