The government on Friday said it will not increase prices of domestic cooking gas and kerosene despite the Budget cutting to half the subsidy on the two mass consumed cooking fuels from April 1.

"(The state-owned) oil companies will continue to hold prices (at the current level)," Petroleum Minister Ram Naik told reporters in New Delhi.

While the government had last year asked the Indian Oil Corporation, Hindustan Petroleum Corporation Ltd, Bharat Petroleum Corporation Ltd and IBP not to increase LPG and kerosene prices in spite of the rise in cost of raw material (crude oil) till March 31, 2004, the cut in Budget subsidy will also not be passed on to the consumers.

The freeze on LPG and kerosene prices will continue beyond April 1, he said.

Earlier this week, Finance Minister Jaswant Singh had cut subsidy on LPG and kerosene to Rs 22.58 per cylinder and 81 paise per litre in 2004-05.

During 2003-04, the government paid oil companies a subsidy of Rs 45.17 per LPG cylinder and Rs 1.63 per litre on kerosene.

These were however way short of the difference between the retail selling price and the cost.

Oil companies lost Rs 103 per LPG cylinder after adding Rs 45.17 to Rs 241 retail price of LPG in Delhi. Similarly, they lost about Rs 3 per litre on kerosene.

With subsidy being cut to half and the resultant effect not being allowed to be passed on to the consumers, the losses of oil companies in 2004-05 will swell to Rs 8800 crore (Rs 88 billion).