Finance Minister P Chidambaram today hinted at moderating the price of fuel to power and fertilizer sectors so as to keep electricity and urea costs down.
The increase in current gas price is going to hit cost of producing power and fertilizer.
Most importantly, it will increase the rates of CNG for automobiles, which is widely used in Delhi. Delhi going to polls this year and already power rates is a hot issue in the national capital and the government would not like to add CNG to the woes of Chief Minister Sheila Dikshit.
The power rates are likely to go up due to recent decision to pass on the coal import cost to the consumers and also due to the falling rupee value.
"The power and fertiliser ministries have raised the issue," Chidambaram told reporters. "We can look at fixing the input costs for these sectors. The issues will be addressed in course of time," he said.
On Whether the government will subsidise gas supplies to power plants and fertilizer units, he said the Cabinet has given output price of gas producers and not the input price of consumers. "Input price of gas will be fixed in course of time," he said.
While producers will get a price determined by the price formula, user industries of power and fertilizer may get gas at lower price with government subsidising the difference. This would be huge subsidy because both these sectors account for over half of gas consumption in India.