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New Delhi , Sept. 12

THE Cabinet on September 11 decided against raising the prices of kerosene and domestic LPG during the current financial year. The losses on account of this decision will be borne by the other companies in the oil sector, according to an official release quoting Petroleum Minister, Mr Ram Naik, in Indore.

Currently, the public sector marketing companies, Indian Oil Corporation, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), are bearing the brunt of the subsidy burden. So far, during this fiscal, the Bill has been in the region of Rs 3,200 crore, with LPG selling at Rs 105 per cylinder and kerosene at Rs 3 per litre below cost.

The Cabinet's decision would mean that the public sector exploration companies Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) would be made to share the burden. Currently, the two companies get full market prices for the crude sold to the refiners, accounting for a third of the country's requirement.

The sharing of burden could be by way of remuneration at below market prices. Another option could be through regulation of the natural gas price, for, ONGC produces 15 per cent of the country's LPG requirement from natural gas.

Speaking at the inauguration of BPCL's Manmad-Indore pipeline, Mr Naik said that the Cabinet also decided to increase the phasing out period for subsidies on kerosene and LPG from three years to five years with effect from April 1, 2003. This would mean that subsidies would now be available up to March 31, 2007.

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