A 14.5 kg LPG cylinder in Delhi at the new price of Rs 281.60 is cheaper than cooking gas sold in Pakistan, Nepal, Bangladesh and Sri Lanka, according to an internal note generated by the oil ministry to justify the November 4 increase in petrol, diesel and LPG prices.

Besides the Rs 20 per cylinder hike in LPG prices, the government had also announced Rs 2.20 per litre increase in petrol price and Rs 2.10 a litre raise in diesel price.

However, kerosene was spared from the increase, that had been necessitated due to a surge in cost of raw material (crude).

A similar quantity of cooking gas in Karachi (Pakistan) is sold for Rs 411.99, at Rs 283.05 in Dhaka (Bangladesh), Rs 372.62 in Colombo (Sri Lanka) and Rs 462.25 in landlocked Kathmandu (Nepal), the note said.

A litre of kerosene in Delhi, priced at Rs 9.01, is cheaper than Karachi (Rs 18.68), Dhaka (Rs 15.44), Colombo (Rs 11.30) and Kathmandu (Rs 15.30).

"No change has been made in the case of PDS kerosene, even though international prices of kerosene have risen to $58.29 per barrel in October 2004 (an increase of 147 per cent) from $23.65 per barrel since March 2002, when the last price change was made. Kerosene requires an increase of Rs 11.28 per litre at Delhi and yet no change has been permitted," the note said.

While international LPG prices have risen to $467 per tonne currently from $194 per tonne in March 2002, an increase of 140 per cent, domestic LPG retail prices have been raised to Rs 281.60 per cylinder from Rs 240.45 (in two tranches - one in June and the other last week), an increase of 17 per cent.

"As against the required increase of Rs 158.15 per cylinder in domestic LPG in Delhi, only an increase of Rs 20 per cylinder has been permitted," the note said.

Retail selling price of diesel has been adjusted by 9 per cent in November, though international prices have risen by 26 per cent since the last price change in August.

The price increase required for diesel in Delhi was Rs 4.24 per litre, whereas the hike has been restricted to Rs 2.12 per litre.

The note blamed the spike in international crude oil prices for the increase. "Crude imports were valued at Rs 60,942 crore (Rs 609.42 billion) for the first half of 2004-05 (for crude oil imports of 49.6 million tonnes) as against Rs 38,665 crore (Rs 386. 65 billion) for crude imports of 44 million tonnes during the same period in the previous year, an increase of 58 per cent.

" Indian basket of crude prices averaged $43.88 a barrel in October 2004 or about 190 per cent of March 2002 price of $23.31 per barrel and 22 per cent higher than those prevailing in May 2004, when the UPA government took over.

"Price increase is necessary to keep our oil PSUs healthy and maintain their ability to service the nation. Oil marketing companies – Indian Oil Corp, Bharat Petroleum Corp and Hindustan Petroleum Corp - have shown much lower profits in the first half of 2004-05 as compared to 2003-04. IBP has reported a loss during April-September 2004-05," the note added.