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LATEST NEWS UPDATES | Nervous over rising crude, government ends monthly LPG price hike -Sanjay Dutta

Nervous over rising crude, government ends monthly LPG price hike -Sanjay Dutta

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published Published on Dec 29, 2017   modified Modified on Dec 29, 2017
-The Times of India

NEW DELHI: In a clear indication of the nervousness over rising oil prices evoking popular anger, the government has asked state-run fuel retailers to stop raising the price of subsidised cooking gas cylinders by Rs 4 a month.

The order was issued in October, around the same time the government cut excise duty on petrol and diesel by Rs 2 per litre to stave off rising consumer anger as fuel rates increased substantially due to hardening of global crude prices.

This is yet another indication of the challenges the government is likely to suffer from rising oil prices, as TOI reported on December 1 after Opec and Russia decided to extend the production cut deal on November 30. Oil company sources said the government may expect the moratorium on upward price revisions on other fuels too if the uptick in crude prices continues.

Hoping to capitalise on sliding global oil prices, the oil ministry had in July 2016 taken the bold step by asking public sector oil marketers to raise the price of subsidised cooking gas cylinders by Rs 2 every month with the aim of wiping out the subsidy.

Emboldened by the continued fall in global oil prices, the ministry doubled the monthly hike to Rs 4 through a May 30 order earlier this year. The revised rate of monthly increase was implemented from June 1. This order envisaged the subsidy to be wiped out by March 2018.

But the government soon found its math turned upside down by international oil prices rose 40% in the last six month due to an extended production cut deal agreed upon by Opec, the cartel of oil exporting countries accounting for 40% of global supplies, and other major producers such as Russia.

After 10 upward revisions in the price, the subsidy - which had dipped in the range of Rs 50-60 at one point in time - today remains at Rs 251 per cylinder in the Delhi market. Marginal hike in refill prices since October was due to "other factors", a senior executive working for one of the leading state fuel retailers told TOI on Thursday. "The order (scrapping the monthly hike) did not give any reason," he added. the order does not apply to non-subsidised refills.

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The Times of India, 29 December, 2017, https://timesofindia.indiatimes.com/business/india-business/nervous-over-rising-crude-government-scraps-monthly-lpg-price-hike/articleshow/62285813.cms


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