New Delhi: The price of Liquefied Petroleum Gas (LPG) cylinders will be hiked by Rs 50 per cylinder starting April 8, said the Minister for Petroleum and Natural Gas Hardeep Singh Puri on Monday. While addressing a press conference, the minister noted that the 14.2-kg domestic cylinder worth Rs 803 will now cost Rs 853, while the domestic LPG cylinders will now cost Rs 553 for Ujjwala beneficiaries, and Rs 853 apiece for non-Ujjwala beneficiaries.
The LPG price hike will also be reviewed by the government every two weeks and altered based on international prices, said Puri. “International price of LPG has been going up. It went up from $415 per MT to $712 per MT, but we never passed it to consumers. The rate of increase has been absorbed by the OMCs…The Rs 50 increase on LPG cylinders addresses the current under-recovery and not the back log. For the back-log, we will be making a request to the Finance Ministry. The three state-run OMCs have incurred LPG under-recovery of Rs 41,338 crore in the last fiscal,” the minister said.
India imports more than 60 percent of its domestic LPG consumption. Prices of LPG in the country are linked to its price in the international market. Government continues to modulate the effective price to consumer for domestic LPG. During the period 2020-21 to 2022-23, the average Saudi CP (international benchmark for LPG pricing) went up from USD 415 per MT to USD 712 per MT. However, the increase in the international prices was not fully passed on to the customers.
This resulted in public sector OMCs incurring Rs 28,000-crore loss due to under-recoveries. However, the Central government approved a one-time compensation of Rs 22,000 crore for oil marketing companies to ease the burden of accumulated losses. Considering the current international benchmark of Saudi CP at higher levels, losses of over approximately Rs 41,338 crore is expected to be incurred in LPG during FY 2024-25 by PSU oil companies. The minister said that prices have been increased to give OMCs some head room in managing their margins. “As we go forward from here, international prices of gas are expected to come down. By next year, they will come down substantially. But we are giving a comfortable cushion to our companies. This decision will be reviewed every 15 days or every month,” said Puri.