New Delhi, July 8
The oil companies may soon be forced to increase the price of LPG and kerosene as Finance Minister P Chidamabaram today did not increase subsidies on domestic cooking gas LPG and Kerosene, leaving a gap of over Rs 9,000 crore to be borne by public sector oil firms.
Till recently, Union Minister of Petroleum and Natural Gas Mani Shankar Aiyar had been talking that the Finance Minister would provide package for the industry — by reviewing the customs duty and enhancing the subsidy bill. But the Union Budget for 2004-05 kept the subsidies on LPG and kerosene at Rs 3500 crore, the level set by the previous NDA government in the Interim Budget.
After the Rs 20 per cylinder hike in pries and halving of excise duty on LPG to 8 per cent announced on June 15, it was expected that the Finance Ministry will extend the subsidy scheme of the two mass cooking fuels by two years to 2007.
Alternatively it was expected to cut customs duty to make up for the gap of Rs 78 per LPG cylinder and Rs 4.43 per litre of Kerosene between the cost and the selling price.
The Budget, however, did none of the two and as things stand subsidies on LPG and kerosene will go from next fiscal.
In 2003-04, when subsidies were cut to Rs 45.17 a cylinder and Rs 1.63 per litre of kerosene, the government asked upstream firms ONGC and GAIL to bear one-third of the Rs 8,200-crore loss while a similar amount was borne by the downstream refining companies.
