The government is planning to hike the price of subsidised LPG cylinders — capped at six a year — by Rs. 130 during January-March 2013. It also plans to hike diesel prices by Rs. 1.5 a litre every month, which will take the hike to Rs. 4.5 a litre during the period. On kerosene, the proposal is that the prices be either increased by 35 paise a litre per month or Rs. 1 a litre per quarter till March 2015.
The proposal, a copy of which is available with HT, is being considered by the government and may be taken to the cabinet for a final decision by Prime Minister Manmohan Singh and other senior UPA ministers.
For subsidised LPG, it is proposed that the three oil marketing companies — IOC, BPCL and HPCL — be authorised to hike the price of each subsidised cylinder by Rs. 130, plus VAT as applicable. Alternatively, the proposal calls for increasing the consumer price of subsidised LPG cylinders immediately by Rs. 65 a cylinder and the balance by another Rs. 65 a cylinder before March 31, 2013.
That’s not all. The proposal further calls for a Rs. 50 per cylinder hike to be passed on to the consumer every quarter starting 2013-14 (or after April 1, 2013) till the under-recovery — or losses to oil companies for selling fuels below cost price — on LPG is reduced to nil.
For diesel, where the oil companies are currently losing around Rs. 9.50 a litre, the proposal calls for an immediate increase in the retail sales prices by Rs. 4.50 (at Rs. 1.50 a month from January 2013 to March 2013) and a Rs. 1 per litre increase every month thereafter till the under-recovery becomes nil on diesel.
Or, it is proposed, the price of diesel be increased by 60 paisa a month till the under-recovery on diesel is eliminated and diesel prices are deregulated.