Mumbai: The Election Commission of India has asked the government to defer a hike in gas prices that is due on April 1.
In 2013, India had approved a near doubling of gas prices from the current $4.20 per million British thermal units to spur investment in exploration for gas and boost returns for firms including state-run Oil and Natural Gas Corp .
Some political parties interpreted the move as aimed primarily at helping energy conglomerate Reliance, which has been calling for an increase in prices when the contract for sales from its gas block off the east coast expires on March 31.
India's young anti-graft Aam Aadmi Party (AAP) party had also asked the election commission to put the federal cabinet's decision price hike on gas on hold.
Petitions to block the gas price hike were also filed with the Supreme Court, which might resume a hearing on the case on Tuesday. A cabinet panel approved the hike in June 2013.
In a letter to the federal petroleum ministry's secretary, the election commission said that it had decided the proposal could be deferred. The letter was posted on the commission's website late on Monday. It did not elaborate.
"It sends a very bad signal to the outside world. In this country, due to elections even the commercial decisions can be postponed," said Deven Choksey, Managing Director at Mumbai brokerage K.R. Choksey Securities.
A decision on the gas price hike is now expected to be taken by the new government after it takes office in May.
Demand for gas in India far outstrips consumption. But the government has kept prices low for strategic industries such as fertilizer producers, deterring investment by companies in the sector.
