After the Cabinet clears the new pricing formula for regular revisions, LPG prices are estimated to rise from Rs. 250 per unit to anywhere between Rs. 406 to Rs. 597 from now until 2016-17.
Every Rs. 59.6 per unit hike in LPG prices means an additional Rs. 3,155 crore cost per annum on urea production in the country, which will result in higher price for fertilizer and eventually higher food prices.
A Rs. 59.6 per unit hike will also create a burden of Rs. 10,040 crore per year on distribution companies that buy power from gas-based power stations, which will eventually be passed on to consumers.
An increase in gas prices will also hike transportation bills as CNG will become costlier Diesel prices are also likely to go up in line with surging global oil prices. “We cannot sustain such heavy losses and have asked the government to approve higher diesel prices as against the present hike of 50 paise a litre,” an official said, adding that losses (or under-recovery) on diesel sales by oil companies have crossed Rs. 7 a litre.