The government has turned down the president office''s advice to de-link liquefied petroleum gas (LPG) prices from the international market-based formula and go back to the old system for protecting the consumers and other stakeholders.
Sources said the president office in the wake of protest from different stakeholders had directed the government to go back to the domestic market-based formula to avoid unreasonable increase in LPG prices.
The government in a move to distant itself from the president office reviewed the LPG prices on the basis of the international market-based formula on November 3, and added Rs 6 per kg.
The government had linked LPG prices with the international market sometimes back. Its argument for switch over from domestic to international market for the pricing was that it would encourage new investment for this sector.
This objective could not be achieved as majority of the stakeholders rejected the change in pricing formula and termed it as an intrigue against the domestic players.
The opponent claim that hardly any new investment came in the sector since the switch over in pricing system. A recent official report indicated that the LPG prices increased 133 percent since the switch over. Its beneficiaries were a few big companies and the government itself whose share in terms of revenue from this sector increased substantially on the basis of proportionate pricing formula.
Other players such as domestic LPG producers, distributors and consumers were badly hit by the government decision. The switch over latterly pushed LPG out of the consumers'' buying power. This situation also poses serious threat to the small investors who feel that their business was at risk due to continuous surge in the prices. The domestic producers, distributors and consumers are protesting with the government against irrational increase in LPG prices and demand that it should reverse the decision for going back to old system for any review in the prices.
The protest was noticed by the presidency, which after taking into account all the factors directed the government to revert to the old system for revising the rates for the consumers.