From 2016 to date, the price for a litre of kerosene has shot by almost Nu 14

While the government has slashed the prices of petrol and diesel following its inclusion in the Goods and Services Tax (GST) regime, kerosene and aviation fuel is still under the excise regime.

The Indian government has also taken steps to gradually reduce subsidy on kerosene and LPG. According to Indian media reports, the Indian government has asked the state oil companies to keep raising prices of subsidised kerosene by 25 paise every fortnight. However, it is not clear whether the Indian policy of gradually reducing the subsidy and capping it resulted in the increased price of Kerosene.

As of yesterday, the price of kerosene in the capital is Nu 28.90 a litre, which has increased by Nu 1.78 from the price on August 5 (Nu 27.12 a litre). “The Kerosene price is revised every fortnightly by few chheltrums,” an employee with Bhutan Oil Distributor said.

In 2013, the price of Kerosene doubled to Nu 55.22 a litre, when the government of India withdrew the subsidy but later reinstated after 22 days. On December 30, 2015,  a litre of kerosene was charged Nu 15.35. Figures reveal that was a marginal increase until then. From 2016 to date, the price of kerosene has shot by almost Nu 14 a litre.

Economic affairs minister Lekey Dorji said that the price of kerosene has been increasing over the years and that it is not under the purview of GST.

“Words going around that Kerosene subsidy has been removed is not true,” he said. “The price revision comes from the principal company every fortnightly and nothing can be done.”

He clarified that the increase in price of kerosene has nothing to do with the recent reduction in prices of petrol and diesel. Since petrol and diesel are now under the scope of GST, excise duty will not be applicable and all exports going out of India under the GST regime is zero taxed.

Kerosene through public distribution system (PDS) in India is sold at Rs 14.96 per litre against the actual cost of Rs 29.91. The difference between the two, Rs 14.95 per litre, is termed as under-recovery or revenue loss.

While the Indian government will provide Rs 12 to meet most of this cost, the remaining Rs 2.95 will be borne by oil producers. The intent is to cut subsidies and bring the prices closer to the market price, which will eventually stop diversion for adulteration as well as encourage consumers to switch to cleaner sources of energy, Indian media report stated.

While the price of petrol and diesel has dropped in the country, fuel price is still dictated by the exchange rate and the market. On November 16, petrol price increased by Nu 2.20 and diesel by Nu 1.38. A litre of petrol now cost Nu 56.31 and diesel, Nu 51.95 in the capital.

Tshering Dorji