The government is likely to increase the prices of regulated fuel products like diesel, kerosene and domestic cooking gas soon, oil & natural gas minister M Veerappa Moily said on Friday.
“A decision will be taken as quickly as possible. Recommendations of the Kelkar committee are under serious consideration. The Cabinet will take a decision shortly,” Moily told mediapersons at a press conference.
The Kelkar Committee, which was appointed by the finance ministry to suggest a roadmap for fiscal consolidation, proposed immediate hike in fuel prices and complete deregulation of diesel prices by start of 2014-15 fiscal. It also proposed a R3-4.50 per litre hike in diesel price and R130 increase per domestic cooking gas in LPG rates, along with raising the number of subsidised cooking gas cylinders for households to nine a year from the current cap of six.
The petroleum ministry has moved a Cabinet note for consideration, proposing various options to reduce the high level of under-recoveries of oil marketing companies and contain the fiscal deficit by reducing government subsidies.
On diesel, the ministry proposed a R3-4.50 per litre hike in one go or in monthly instalments of R1 or R1.50 per litre. From April, it wanted a R1/litre increase every month till such time that the current loss on account of selling diesel below market price of R10.16/litre is wiped out.
The ministry proposes to increase subsidised domestic cylinders immediately by R65/cylinder and the balance by another R65/cylinder before March 31, 2013. Further, it proposed to increase R50/cylinder till the under-recovery on LPG is reduced to zero.
On kerosene, the proposal is that the prices be either increased by 35 paise a litre per month or R1/ litre per quarter till March 2015.
In September, the government had restricted the supply of subsidised domestic LPG cylinders to six per household in a year, which has witnessed stiff opposition. Any requirement above this will have to be bought at the market rate, which is more than double the subsidised price of R410.42 per cylinder in Delhi.
The under-recovery for the current fiscal is estimated to be R1,67,000 crore.