An across-the-board increase in petrol, diesel and cooking gas prices is likely by mid-May, immediately after the Budget is passed in Parliament.
"There is a lot of pressure on the government from oil companies to increase fuel prices but they been informally told to hold on till the Budget is passed in Parliament," a senior government official told HT. "There may be one small increase in petrol price that is likely to come immediately- as early as next week- but an across-the-board hike, which would also include diesel and cooking gas is possible only after the Budget gets passed."
As part of fiscal consolidation measures, the finance minister has already announced his intent to bring down the subsidy outgo on fuel, the official said. "This (cutting down subsidy bill) is not possible without an hike in fuel prices as losses on petrol have crossed R6 per litre, on diesel at over R14 per litre and close to R500 per cooking gas cylinder (LPG)."
"The fuel price hike would help garner more funds for the states and latter can also pass on some benefits back to consumers by implementing a equivalent reduction in VAT rates (equivalent to hike in revenues due to the advalorem structure)," the official said.