The government is “seriously” considering a set of proposals regarding auto fuel and LPG pricing and a decision will be taken soon, oil minister Veerappa Moily said on Wednesday.
“The Kelkar Committee's recommendations (which include fuel price hikes at regular intervals till the oil marketing companies' under-recoveries are eliminated) were under serious consideration of the government,” Moily told reporters.
The oil ministry sent the proposal to the Cabinet Committee on Political Affairs, the body empowered to take a decision on fuel prices, based on recommendation of the Vijay Kelkar Committee, which was appointed by the finance ministry to suggest a road map for fiscal consolidation.
As FE reported earlier, to make the fuel price hikes politically acceptable, the government is also considering raising the ceiling on subsidised domestic LPG cylinder from 6 to 12 per household. In tandem, fuel prices — diesel, LPG and kerosene — would be increased in a phased manner, so as to reduce the runaway subsidy bill.
The proposals under consideration include an immediate increase in subsidised domestic cylinders by R65/cylinder and another R65/cylinder before March 31, 2013. Further it is proposed to increase prices by R50/cylinder till the under-recovery on LPG is reduced to zero. On diesel, the ministry has proposed a R3-R4.50/litre hike in one go or in monthly installments of R1 or R1.50/litre. From April, it wants 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. On kerosene, the proposal is that the prices be increased by 35 paise/litre per month or R1/litre per quarter till March 2015.