India likely to restore subsidy to Bhutan

India’s Ministry of External Affairs has initiated the process of assessing the financial and logistical implications to ensure a quick decision on restoring supply of subsidised gas to Bhutan, reports PTI.

A meeting, chaired by Foreign Secretary Ranjan Mathai and attended by senior Oil Ministry and MEA officials, discussed various aspects to reinstate the subsidised gas and kerosene supply, official sources said here.

The subsidy cut, just before the elections, had come against the backdrop of apparent unhappiness over the meeting between Bhutan PM Jigme Thinley and a top Chinese leader last year.

He had a meeting with the then Chinese Premier Wen Jiabao in Rio and also imported some 20 buses from China, a development which had taken India by surprise.

Sources said the meeting on Friday was aimed at exploring the option to quickly restore the supply even if it was on an interim basis. However, an exhaustive reinstatement plan has to be cleared by the Union Cabinet.

Meanwhile, Bhutan’s Prime Minister-elect Tshering Tobgay, in an interview to PTI, asked for urgent reinstatement of the subsidised supply gas and said, “Even though my party is yet to form government, I have had very reassuring discussions with the Indian Ambassador in Thimphu on this subject”.

Bhutan has made a formal request to External Affairs Minister Salman Khurshid not to implement the subsidy cut as it would have resulted in steep hike in diesel prices.

The subsidy, amounting to Rs 150 crore per annum, is borne by Indian Oil as part of its under-recoveries reported to the petroleum ministry. IOC cut the subsidy on kerosene and LPG on July 1, a fortnight before Bhutan went to polls, following a piece of advice from the MEA to revise prices because it would not reimburse the subsidy component on the two fuels.