Market driven price for LPG will be Rs 747 in Delhi: IOC

PK Goyal, director - finance, IOC, says that the under recovery on diesel effectively will only be reduced by Rs 3.50 a litre.

Also read: Diesel price-hike will aid fisc, give RBI room: Rangarajan Below is the edited transcript of his interview to CNBC-TV18. Q: What will this mean in terms of under-recoveries because there is only Rs 5 hike in diesel, where you were losing almost Rs 19 a litre. There has been no hike in petrol prices, where you are losing over Rs 6 a litre, no hike in LPG or kerosene. What does this mean for under-recoveries?
A: On diesel, we are not having an under-recovery of Rs 17.34, out of that Rs 3.50 price increase plus Rs 1.50 is the increase in the excise duty on diesel. So, the under-recovery will reduce by Rs 3.50 only. In case of MS prices, with the reduction in the excise duty we will not have any under-recovery on the MS as on today. Q: There will be no under-recovery on petrol because of the reduction in excise duty?
A: Yes, because the price will not be reduced, whatever the prices are there that adjustment will be made in the excise duty and whatever the under-recoveries are there that will be adjusted in the excise duty element. Q: The government says that OMCs will save around Rs 5,000 crore odd on account of the capping of LPG cylinders at 6. By when will you decide the non-subsidised market rate for LPG cylinders beyond that?
A: Non-subsidised rate in Delhi will be Rs 747, which we are mentioning that Rs 399 is the price in Delhi and we have an under-recovery of Rs 347 on LPG. So, the market-determined price will be Rs 747.
Q: Is the rate of Rs 747 per cylinder has already been sort of put in motion. Can you tell us by when consumers will have to start paying that rate or will there be some time gap between that particular new rate for non-subsidised LPG cylinders kicking in?
A: The government press release clearly mentioned that in the remaining six months period they can take another three cylinders. Once three cylinders are exhausted by individual consumers then they have to take the market-determined prices. Q: So, this is hugely important for the huge middle class, which consumes LPG. You mean if you still have not consumed six cylinders you can go ahead for three cylinders?
A: In the remaining period individuals can take three cylinders at subsidised rates and once three cylinders are exhausted then only a market-determined price will be there for per consumers.