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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