LPG price hiked by ₹50; rates up by ₹244 in one year

Cooking gas LPG price on Wednesday was hiked by ₹50 per cylinder, the third increase in rates since May on firming international energy prices.

Non-subsidised LPG now costs ₹1,053 per 14.2-kg cylinder in the national capital, up from ₹1,003 previously, according to a price notification of State-owned fuel retailers.

Common households pay non-subsidised rates for the cooking gas they buy, after the government restricted subsidy to just poor beneficiaries who got connections under the Ujjwala scheme.

This is the third increase in the LPG rate since May and the fourth this year. The price was hiked by ₹50 per cylinder on March 22 and again by the same quantum on May 7. Rates went up by ₹3.50 per cylinder on May 19.

Prices have gone up by ₹244 per cylinder since June 2021. Of this, ₹153.50 increase happened since March 2022.

Petrol and diesel prices, however, continue to be on freeze for the third straight month. The pause followed rates being hiked by a record Rs 10 per litre in a matter of 16 days beginning March 22.

In May, the government cut excise duty on petrol by ₹8 per litre and diesel by ₹6 per litre to cool soaring inflation.

At that time, the government also stated that ₹200 per cylinder subsidy on cooking gas will be limited to only 9 crore poor women and other beneficiaries who got free connections under the Ujjwala scheme and the remaining users including households will pay the market price (also known as non-subsidised rate).

Originally, non-subsidised cooking gas was the one that consumers used to buy after exhausting their quota of 12 cylinders at subsidised or below-market rates. However, the government stopped paying subsidy on LPG to households in mid-2020.

Non-subsidised LPG costs ₹1,052.50 per 14.2-kg cylinder in Mumbai, while it is priced at ₹1,079 a bottle in Chennai and ₹1,068.50 in Kolkata.

Rates differ from state to state depending on the incidence of local taxes such as VAT. Prices are higher in states with higher taxes.

Alongside, oil firms also reduced the price of commercial LPG cylinders—the ones used by establishments like hotels and restaurants. It now costs ₹2,012.50 per 19-kg cylinder in the national capital, down from ₹2,021 per cylinder.

Reasons for hike

International oil prices have been on the rise this year. They jumped to a 13-year high of $140 per barrel in March before shedding some of the gains. Brent was trading at $103.92 per barrel on Wednesday.

To compound things, the Indian rupee tumbled to ₹79.24 to a dollar, making imports costlier.

High dependence on imports

India relies on overseas purchases to meet about 85 per cent of its oil requirement, making it one of the most vulnerable in Asia to higher oil prices.

While India has surplus oil refining capacity, it does not manufacture enough LPG to meet domestic demand and imports significant quantities from nations such as Saudi Arabia.

Published on

July 06, 2022

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