The Hindu Business Line : `LPG price must be hiked to Rs 492 for parity'

THE price of cooking gas would need to be hiked by Rs 210.40 per cylinder and kerosene by Rs 11.05 per litre to maintain import price parity, the Union Minister of Petroleum & Natural Gas, Mr Mani Shankar Aiyar, informed the Rajya Sabha on Wednesday.

The State-owned oil marketing firms have incurred a Rs 7,800-crore loss due to under-recovery on these products, he said while making a statement on a calling attention motion on the exorbitant rise in prices of petro products.

The oil PSUs have also estimated under-recoveries of an additional Rs 3,300 crore during April-November 2004 due to non-revision in the prices of petrol and diesel in line with international prices.

Considering the current level of duties, taxes and Government subsidy, the retail selling price of PDS kerosene in Delhi would need to be increased from Rs 9.01 to Rs 20.06 per litre and domestic LPG from Rs 281.60 to Rs 492 per cylinder based on November 2004 international prices.

The Oil PSUs have been sharing the burden on kerosene and cooking gas by not passing the full increase in international prices in the domestic consumer prices, he said.

Despite the steep increase in global prices, the selling price of PDS kerosene was not increased even after an announcement by the previous Government of the dismantling of the Administered Price Mechanism from April 1, he said.

After the UPA Government assumed office, the retail selling price of domestic LPG has been increased twice by only Rs 20 a cylinder, once in mid-June and in early November, he said.

To insulate the consumers from the unprecedented hike in global oil prices, Mr Aiyar said appropriate measures have been taken to the extent possible so as not to pass on the increase fully.

Considering the high international prices and huge under-recoveries of oil PSUs, the hike in prices effected on November 5 was to the full extent of the rise in import price parity in case of petrol and half the difference between the domestic and the import parity prices of diesel, he said.

When the import parity price declined on November 16, domestic prices of petrol wev re accordingly reduced, he added.

With imports accounting for 71 per cent of India's oil requirement, the volatility in international oil prices impacts domestic consumer prices. To reduce the impact of global prices on domestic consumer prices of petrol, diesel, PDS kerosene and LPG, Mr Aiyar said the Government had cut excise duties on petrol and diesel twice in mid-June and mid-August and once each on domestic LPG in mid-June and PDS kerosene in mid-August.

Besides, customs duties on petrol, diesel, PDS kerosene and domestic LPG were reduced by five per cent each on August 19, he said.

Global oil prices have been unusually high during the current year, he said pointing out that the average Indian basket of crude oil prices has gone up from $27.96 a barrel during 2003-04 to $37.69 a barrel during Apr-Dec, 2004.