With the international prices of liquefied petroleum gas moving up by more than $30 a tonne in the past three months, domestic oil marketing companies are making a concerted attempt to press the government for raising the domestic prices of subsidised LPG.
The companies said since the last price revision in February, the cost of an LPG cylinder had gone up by at least Rs 120 because of the increase in international prices, which have moved up from $295 a tonne in October to $315 a tonne in November and $327 a tonne at present.
Senior officials of the oil companies who met Petroleum Minister Ram Naik last week, told him that they had been taking a combined hit of around Rs 400 crore (Rs 4 billion) every month because of the stagnant domestic prices of cooking gas.
Though the government paid around Rs 70 as subsidy on every cylinder of domestic LPG, it was inadequate to cover the cost, they said.
The minister was told that domestic LPG prices had not been revised after the dismantling of administered pricing mechanism in the oil sector from April 1.
Though during the presentation of the Union Budget on February 28, the then Finance Minister Yashwant Sinha had announced an increase of Rs 40 per cylinder, the government was forced to partly roll back the increase and a raise of Rs 20 a cylinder was allowed finally.
According to oil industry sources, it was hoped that the government would raise the prices of the politically sensitive domestic LPG after the Gujarat elections.
After waiting for more than a week following the elections, the industry decided to approach the government to seek a hike in prices.
The government is dragging its feet over the price increase since it is of the view that most of the middle class and some poorer sections of society use LPG for cooking.
Any hike in its prices can have an adverse impact on the ruling BJP's popularity among a large chunk of voters.
The oil industry, on the other hand, is of the opinion that the middle class will not mind paying a little more for the user-friendly cooking fuel.
However, the government needs to inform the users of the compulsions under which it is forced to raise its prices.
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