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New Delhi - India's government has approved a doubling of natural gas prices, the first hike in three years, in a politically sensitive decision set to take effect around election time next year.
The Cabinet Committee on Economic Affairs announced late on Thursday that the price of domestically produced natural gas should rise to $8 per unit from the current $4.2 in April next year.
"It will be applicable from April 1 2014 and will be valid for five years," Oil Minister M Veerappa Moily told the Press Trust of India news agency.
The new policy, which will raise the cost of electricity, transport fuel, fertiliser and cooking gas, will benefit domestic gas producers whose shares rose sharply on Friday morning.
India's largest state-run energy explorer ONGC jumped as much as 10.12% to 353.0 rupees, while private energy giant Reliance Industries rose 5.12% to 873.0 rupees.
The benchmark 30-share Sensex index was also up 1.50% at 19 158.9 points.
The Communist Party of India (CPI) said the "disastrous" decision had been rammed through despite objections by cabinet members and would lead to a damaging rise in inflation and higher costs for farmers.
CPI leader Gurudas Dasgupta said the government had caved in to "pressure" from the corporate sector.
India is scheduled to go to the polls in the first half of 2014 with inflation - which has often climbed to double figures during recent years - one of the main issues affecting voters.
The government earlier partially deregulated petrol and hiked diesel prices in an effort to contain ballooning debt caused in part by fuel subsidies.
