New Delhi:
The government will permit state-run oil marketing companies to set diesel prices, Oil Minister Veerappa Moily said on Thursday, in a surprise move that could help the government reduce its budget-busting subsidy bill. It also raised the cap on subsidized cooking gas (LPG) cylinders to nine from six - a move that may result in a Rs. 5,000 crore hit to the national exchequer.
Here are the 10 latest developments in the story:
Oil firms can now effect small changes in the price of diesel. Sources told NDTV Profit that a price revision is likely next week.
Finance Minister P. Chidambaram said he estimated that the fuel subsidy bill will remain the same as earlier because it was difficult to specify either the quantum or the timing of a price increase.
Finance Ministry sources told NDTV Profit that small diesel price hikes were unlikely to hurt inflation. Earlier studies have shown that gradual price hikes do not impact inflation significantly.
Officials of the three oil marketing companies - Bharat Petroleum, Hindustan Petroleum and Indian Oil - are meeting today, although an immediate decision on a price hike is unlikely.
State-run refiners currently sell diesel -- the most consumed fuel in India -- at a loss of Rs. 9.28 per litre.
The oil companies can still continue to claim subsidy from the Finance Ministry, sources said.
Stocks of oil companies shot up after the news. HPCL shares were up 7 per cent at Rs. 348.50 while IOC jumped 5 per cent to Rs. 310.70 at 1.35 p.m. BPCL shares traded 4.5 per cent higher at Rs. 398.8.
The government also hiked the cap on subsidized LPG cylinder per year to nine from six. However, this rule will apply only from April 2013. The Election Commission has permitted the government's proposal for an increase in the cap of subsidised LPG cylinders.
For the remaining period of the current fiscal year ending March 31, 2013, the cap has been increased to five from three.
Before the cap was raised, the Oil Ministry has projected a subsidy loss of Rs. 37,411 crore on cooking gas in 2012-13 at Rs. 520.50 per cylinder.
Post a comment