NEW DELHI: The government said yesterday it had doubled natural gas prices to stimulate investment and reverse a decline in domestic production which has caused power shortages for industry.
The cabinet approved the first hike in domestically produced gas prices in three years late on Thursday, saying the unit price would rise to $8 in April next year from its current level of $4.2.
The decision, contested by left-wing political parties and opposed by some in the government, is politically sensitive because of its likely impact on inflation and it will take effect around election time.
Finance Minister P Chidambaram said India was dependent on costly imports for 30 percent of its gas requirements but this share was set to surge because India’s output was falling. “We have to produce more gas and the only way it can be done is to bolster investment,” Chidambaram said at a news conference.
He acknowledged the power and fertiliser ministries had raised objections to the policy, which will increase the cost of already heavily subsidised electricity and fertilisers.
The impact on consumers would be taken into account and prices would be adjusted, possibly through greater subsidies, because electricity and fertiliser “cannot become unaffordable,” Chidambaram said.
AFP
