FNPO PATTUKOTTAI

Gas Price Hike Deferred by 3 Months

The Cabinet on Wednesday decided to maintain status quo on prices of domestically produced natural gas for three months.

Oil Minister Dharmendra Pradhan addressing a press conference after the Cabinet meeting said the issue requires comprehensive discussion.

The government also clarified that there is no proposal from the petroleum ministry's side for any hike in LPG or kerosene prices.

Gas price was set to almost double from the current level of $4.2/unit from April 1 but was not implemented by the earlier UPA government after the Election Commission asked for its deferment till the elections are over.

The UPA government had relied on the Rangarajan formula to arrive at the $8.4 per unit price, but the Bharatiya Janata Party (BJP) had promised to review the formula.

The government is already struggling with persistently high inflation. Consumer price inflation in India has been running near or above 10 per cent for almost two years through the end of 2013.

According to estimates, every dollar increase in gas price will lead to a 45 paise per unit increase in electricity tariff. CNG prices would increase by a minimum Rs. 2.81 per kg, while PNG prices will go up byRs. 1.89 per unit for every dollar rise in gas prices. Urea prices will go up by Rs. 1,370 per ton.