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Hike cooking gas price, says panel

business Updated: Aug 13, 2008 00:51 IST
HT Correspondent
HT Correspondent
Hindustan Times
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Urban consumers may have to pay twice as much as they do now to keep their kitchen fires burning, if a panel appointed by the prime minister has its way.

The high-powered committee, set up under former cabinet secretary BK Chaturvedi to review the finances of the country’s oil companies, has recommended limiting the sale of subsidised kerosene and cooking gas, or LPG, only to poor families.

That means any household with a monthly income of more than Rs 2,250 — that’s the Central government-defined poverty line — will cease to have access to subsidised cooking gas.

Currently, a cylinder of LPG costs Rs 614 to an oil marketing company, but it is sold in the market at half that price — Rs 336, the committee said in its report.

Government officials declined to comment as the report has yet to be made public.

The committee was set up in view of the crippling finances of state-owned oil companies, which have been hit hard because of a sharp surge in global crude prices.

“LPG is used mostly in middle-class homes where the argument for large subsidies is weak,” it said. It has proposed a gradual phasing out of such subsidies.

To begin with, the report said, the annual LPG entitlement of each household should be fixed at eight cylinders, six of which would be at subsidised rates, while the rest would cost more. If any family wants to buy more than eight a year, those should be made available at full market price.

The entitlement of six subsidised cylinders will be reduced to four, two and then zero, over a period of three years, it recommended.