The Hindu Business Line : Govt rolls back monthly hike in LPG prices

Under pressure from the Left parties, the Government on Wednesday rolled back its decision to increase the price of domestic cooking gas by Rs 5 per cylinder each month.

"It has been decided by the Cabinet Committee on Economic Affairs (CCEA) that the previous decision to raise LPG price by Rs 5 every month stands rescinded," the Petroleum Minister, Mr Mani Shankar Aiyar, told newspersons here after the meeting of the Union Cabinet followed by that of the CCEA.

The Government had, on November 4, taken a decision to raise the price of LPG by Rs 20 per cylinder with immediate effect which was to be followed by a hike of Rs 5 per cylinder in each subsequent month to cover the steep hike in input costs and bring down the subsidy on cooking gas to nil.

The decision to roll back the monthly increases, according to sources, follows the UPA Coordination Committee meeting earlier in the morning where the Left parties demanded a roll back in LPG prices.

Mr Aiyar, however, reiterated that the prices of no other petroleum products were being changed.

Natural gas for fertiliser units

Earlier, at the meeting of the Union Cabinet, the Petroleum Ministry's proposal to raise the price of natural gas for fertiliser and power units was referred to a high-powered Group of Ministers (GoM).

The Ministry had proposed to raise the price of natural gas by 12 per cent for fertiliser plants and by 26 per cent for power stations in the interim period till complete deregulation of the natural gas sector.

The Ministry, as per its proposal, seeks to raise the price of natural gas from Rs 2,850 per thousand cubic metres to a fixed price of Rs 3,200 per thousand cubic metres and Rs 3,600 per thousand cubic metres to the fertiliser and power sectors, respectively on a provisional basis, official sources said.

Petroleum Regulatory Bill

In another decision, the Cabinet has referred the Petroleum and Natural Gas Regulatory Bill also to a Group of Ministers (GoM).

The proposed Bill seeks to set up a Petroleum Regulatory Board for petroleum and petroleum products, including natural gas, but not crude oil.

The Bill seeks to empower the Central Government to broadly lay down the policy framework and intervene in matters adversely affecting public interest in certain exigencies as well as maintaining a data bank of information on activities relating to petro-products to enable planning and development thereof.

The need for introducing the Bill was felt after the Government decided to go in for phased dismantling of the Administered Pricing Mechanism (APM) and full deregulation of the petroleum sector from April 2002 for marketing and pricing of all petroleum products, except kerosene under the Public Distribution System (PDS) and domestic LPG.

OVL investment

The CCEA has also approved the proposal of ONGC Videsh Ltd (OVL) to make an additional investment of $1.07 billion for the phase-I development of the Sakhalin-I offshore field.

This will be in addition to $1.7 billion already approved.

The Finance Minister, Mr P. Chidambaram, told newspersons after the CCEA meeting that OVL, the overseas arm of state-run Oil and Natural Gas Corporation (ONGC), would raise the additional money from its own resources.

The additional amount of $1.07 billion would include about $503 million towards carry loan to Russian parties in production-sharing agreement.