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India restores subsidy on LPG,kerosene to Bhutan

Subsidy reinstated after new PM reiterates his support to India

Written by Amitav Ranjan | New Delhi | Published: July 20, 2013 12:59:25 am

Two days after Bhutan’s future prime minister reiterated his support to India,New Delhi has decided to restore the subsidy on cooking gas and kerosene for the tiny Himalayan kingdom.

At a meeting chaired by foreign secretary Ranjan Mathai on Friday,petroleum ministry officials were instructed to reinstate the subsidy on both fuels from next month. The Ministry of External Affairs (MEA) will pick up the annual tab of Rs 50 crore from its budget.

“An in-principle decision was taken today to continue the subsidy. The official announcement is likely to be made during the visit of Bhutan’s new PM later this month,” a top official said.

Bhutan’s incoming PM Tshering Tobgay on July 17 thanked Prime Minister Manmohan Singh for his assurance of “steadfast and unflinching” support from India,and asserted his “unwavering resolve and commitment to preserve and strengthen the special ties” with India.

Earlier this week,the MEA had intervened to stop Indian Oil from cutting subsidy on diesel sold to Bhutan after the state-run company informed its retail outlet operators to start charging market price on the fuel.

Officials said Tobgay made a formal request to External Affairs Minister Salman Khurshid not to implement the subsidy cut as it would have raised diesel prices by a massive Rs 9.45 per litre in the country.

The diesel subsidy,amounting to Rs 150 crore per annum,is borne by Indian Oil as part of its under-recoveries reported to the petroleum ministry.

IOC cut the subsidy on kerosene and LPG on July 1,a fortnight before Bhutan went to polls,following an advice from the MEA to revise prices because it would not reimburse the subsidy component on the two fuels.

The MEA said that since Bhutan’s 10th Plan expired on June 30,fresh terms of financial assistance,including subsidies would have to be negotiated.

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