Hindustan Petroleum Corp. liquefied petroleum gas (LPG) cylinders. (Photographer: Dhiraj Singh/Bloomberg)

India Is Said to Halt Cooking Gas Price Increases to Boost Use

(Bloomberg) -- India has halted monthly increases in subsidized cooking gas prices as Prime Minister Narendra Modi pushes to provide the fuel to the poor and cut the use of polluting options, according to people with knowledge of the matter.

State-run oil marketing companies, including Indian Oil Corp. and Bharat Petroleum Corp., were instructed to refrain from increasing the government-regulated prices of cooking gas from Oct. 1, according to the people, who asked not to be identified because the information is private. Fuel retailers had started raising prices by 2 rupees (3 cents) per 14.2-kilogram (31-pound) bottle of liquefied petroleum gas from June 1, 2016 and the increases were doubled from June 2017.

Oil ministry spokesman Alok Deshwal said he couldn’t immediately comment. Indian Oil and Bharat Petroleum shares reversed gains on the news. Indian Oil fell as much as 1 percent to 397.40 rupees, while Bharat Petroleum lost 1.1 percent.

The price increases were aimed at ending the government’s subsidy on the fuel as Modi’s government tried to balance fiscal discipline with the need to wean citizens off polluting fuels. The move has the potential to worsen the government’s finances at a time when it is trying to mobilize funds through additional borrowings. It may also put the fiscal gap aim of 3.2 percent of gross domestic product in the year that ends March at risk.

In May 2016, Modi embarked on a drive to provide 50 million free cooking-gas connections to women from extremely poor households by March 2019. The aim was to reduce the use of polluting fuels such as wood and dried cow dung cakes that cause 1.3 million premature deaths in India every year. 

The government has distributed 32.2 million new cooking gas connections till Dec. 21 under the plan, according to Oil Minister Dharmendra Pradhan. This has increased LPG penetration to about 79 percent of the nation’s households.

©2017 Bloomberg L.P.