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India raises gas prices by 33%
October 18, 2014, 5:01 pm

 

"Henceforth, like petrol, pricing of diesel will be market determined," said the Indian Finance Minister [Xinhua]

“Henceforth, like petrol, pricing of diesel will be market determined,” said the Indian Finance Minister [Xinhua]

Indian Finance Minister Arun Jaitley on Saturday announced that the government is raising domestic gas prices by more than 33 per cent to $5.61 per million British thermal units (mmBtu) from the current base price of $4.2 per mmBtu.

At a press conference in New Delhi, Jaitley said the price was “sufficient incentive for drilling and investment” while at the same time “not excessively burden the consumers.”

The new rates will be effective from November 1 and rates will be revised every six months with the next revision being on April 1.

Higher gas prices would increase the expense of running power stations and fertilizer plants, raising infrastructure and food costs and accelerating the rate of inflation.

Gas price increase had been deferred on three occasions previously.

In a major reform push, the Indian government also deregulated diesel prices resulting in a 3.37 rupees ($0.05) a litre cut in prices. After deregulation, government will no longer provide subsidy on diesel.

“Henceforth, like petrol, pricing of diesel will be market determined,” said the Indian Finance Minister.

This will be the first reduction in diesel rates in over five years.

The move was lauded by many as “reformist”.

 

“Diesel price deregulation is brave move,” tweeted Sukumar Ranganathan, Editor of Indian business daily Mint.

TBP and Agencies