Reeling under the pressure of high international oil prices, the state owned oil companies have decided to hike auto Liquefied Petroleum Gas (LPG) prices yet again by a substantial Rs 6 per litre, the third hike in a year. Auto LPG will now cost Rs 49.72 per litre as against Rs 43.65 per litre last month.
Oil firms revise auto LPG rates every month based on average of international benchmark prices. For the past month, crude oil has remained above the $120 per barrel mark, necessitating the hike in prices. Auto LPG prices were hiked by almost Rs 3 per litre on March 1 when rates were increased from Rs 40.7 per litre to Rs 43.65 a litre.
Cooking gas, or LPG used in households is yet another item on which oil firms are losing a record Rs 570.50. The current price of LPG hovers around Rs 400 a cylinder. Oil companies are typically reimbursed by the government on the losses they make, but this leads to ballooning of the subsidy bill of the government. Of late the government has been criticized for its huge subsidy bill which has led to a large fiscal deficit. Estimated LPG subsidy for FY12 is Rs 27,000 crore.
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