20000221

India to raise LPG, kerosene prices

NEW DELHI: India will raise the domestic prices of kerosene and liquefied petroleum gas (LPG) on February 29 but diesel prices would remain unchanged, Press Trust of India (PTI) on Sunday quoted Petroleum Minister Ram Naik as saying.

"We will increase the price on February 29. It is inevitable to reduce the price differential between diesel and kerosene," the news agency quoted Naik as saying.

A litre of kerosene is sold 11.45 rupees (26 cents) less than a litre of diesel.

Earlier this month, Naik told a panel of parliamentarians that the price of kerosene needed to be raised to curb its diversion for adulteration of diesel.

Finance Minister Yashwant Sinha is scheduled to unveil the annual budget for 2000/01 (April-March) on February 29.

The budget does not price petroleum products directly, but decides on customs and excise duties which affect the landed cost of petroleum products and in turn their pricing.

"Finance Minister has in principle agreed to cut down the duties and it should be reflected in the budget," PTI quoted Naik as saying.

A government panel said last month that duties on diesel and crude oil must be cut to offset the impact of rising global prices on domestic prices.

The panel recommended that customs duty on diesel be lowered to 25 percent from 30 percent and excise duty be cut to eight percent from 16 percent.

The customs duty on crude be reduced to 10 percent from 20 percent, it said in its report.

PTI quoted Naik as saying that the increase in LPG and kerosene prices was to contain subsidies.

India fixes prices of key products such as kerosene and LPG to support a cross-subsidy scheme aimed at helping the poor. The surpluses are generated from taxes on petrol and aviation fuel.

The subsidy on a litre of kerosene is 7.85 rupees while that on an LPG cooking gas cylinder of 14.2 kg is 144 rupees.-Reuters