Monthly LPG hike may be rolled back

PSUs may be asked to reduce petrol prices at November 15 review meeting

The government is reconsidering the decision to raise cooking gas prices by Rs 5 per cylinder every month, but is unlikely to rollback the hike of Rs 20, effected last week.

In addition, oil marketing companies might be asked to marginally reduce petrol prices in the next fortnightly review due on November 15, sources said.

"The retail prices before Thursday's hike were fixed based on international crude oil prices of $41 a barrel. There is no scope for reducing the price right now even though international prices have come down after the elections in the US," an executive with an oil marketing company said.

The finance ministry has ruled out further duty cuts. It has argued that any more cuts would result in a significant loss of revenue.

Sources estimated that under-recovery from cooking gas was roughly Rs 3,500 crore annually, which translated to about Rs 158 a cylinder.

The Cabinet decision in July had laid down that the oil marketing companies would be allowed to increase the retail prices of petrol and diesel if the international prices remained within a variable band.

In case international prices breached the 10 per cent ceiling of the band, the government was required to intervene through modulation of the excise duty rates of petrol and diesel.

The international oil prices within the first five months of the current year touched a 15-year high of $39.36 per barrel, which made the government decide on the price band.

Though the international crude prices stabilised after a meeting of the Oil Producing and Exporting Countries (OPEC) in June, they again soared to cross $55 a barrel in October.