Oil cos may hike LPG price by Rs 40, kerosene by Rs 2 per litre

State-owned oil retailing firms are seeking a Rs 40 per cylinder raise in domestic cooking gas (LPG) prices and a Rs 2 per litre hike in kerosene prices to offset the drastic cut in subsidy provided by the government. ‘‘This year, the finance ministry has reduced the subsidy (on LPG and kerosene) to two-thirds of the amount allowed in 2002-03. Unless LPG and kerosene prices are raised, the all-time high profits of oil companies will erode,’’ sources said.

The subsidy Rs 67.75 per cylinder on LPG and Rs 2.45 a litre on kerosene in 2002-03 was not enough to cover the cost and IOC, BPCL, HPCL and IBP together lost Rs 5,430 crore, they said adding the state-run firms have approached Petroleum Minister Ram Naik for immediate raise in LPG and kerosene prices. The losses on selling LPG and kerosene below the cost were covered by higher refining margins, higher realisation on petroleum stocks and sharp reduction in interest rates. With subsidy on LPG cut to Rs 45.17 a cylinder and that on kerosene to Rs 1.63 a litre, under-recoveries will rise substantially.