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India likely to increase LPG, kerosene prices

NEW DELHI (Commodity Online) : India is likely to increase natural gas, cooking gas and kerosene prices based on the recommendation by a committee which submitted its report Wednesday.

Speaking to reporters here, India’s Petroleum Secretary S Sundareshan said the government will decide soon on raising price of Natural Gas produced by state-owned ONGC and Oil India by 30 percent.

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Under pooling of prices, the producers will get the price as per the production sharing contract between them and the government. But the consumer prices will be uniform irrespective of the source of gas.

The Committee, set up by the Indian government to draft a fuel pricing policy, also made a slew of recommendations including freeing retail pricing from the government regulations.

In its report the committee said India’s subsidy-driven fuel pricing policy has to be drastically overhauled to help the petroleum industry stay competent in an uncertain market environment.

The committee has recommended an increase of Rs 100 per LPG cylinder and Rs 6 per littre of kerosene.

The committee also said the oil marketing companies are suffering a loss of Rs 3 per every litre of petrol being sold, suggesting freeing up the retail pricing of the commodity from government regulations.

Freeing petrol and diesel prices would result in an increase of Rs 3 per litre in petrol prices and Rs 3-4 in diesel prices.

The oil marketing companies in India do not have a free pricing mechanism in which prices of fuels like LPG, kerosene, petrol and diesel are decided on the basis of international Crude Oil costs.

Instead, India follows a subsidised fuel pricing mechanism in which these fuels are sold by state-run oil marketing companies at a fixed rate even if international prices of crude go up. As a result, many OMCs sustain losses when selling prices are even lower than production cost.






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alok  Posted On : Feb 08, 2010 11:24 AM
Why energy experts think that petroleum products which are imported are everything and do not lay stress on domestic fuels. Induction cooking costs 50% less and only 40% more than subsidized LPG and subsidized kerosene respectively. So there is no need of subsidizing cooking fuels in electrified areas. Solar passive thermal energy when used for cooking water heating, food drying and lighting costs 7 times less than even subsidized LPG and 50% less than even subsidized kerosene .So cooking fuel subsidy is not needed on days with sunny hours which are about 300 or more a year.As sub subsidized priced fuel are freely available as alternative LPG should only be reserved for affording public in this country with 57 crore phones, 20 crore automobile and more than population energy guzzeling equipments at Rs 1050 per cylinder or more as the same costs Rs 900 in neighboring Pakistan. This price of LPG will be enough to profitably curtail HSD and petrol prices to Rs 35 which will be enough to accelerate Indian economy. Why consumers are being blessed by Rs 3000 LPG subsidy per year on their average consumption of 10 cylinders when their energy related expenditures are many times more . LPG subsidy will finish India like shortsighted, divided, opportunist, regional, teeth less, black market friendly and self centered politics.