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Domestic cooking gas prices have been increased by Rs 29 per cylinder, marking the second hike in three months as state-owned oil marketing companies continue to face pressure from elevated global energy costs.
With effect from Sunday, June 7, the price of a 14.2-kg domestic LPG cylinder in Delhi has been raised to Rs 942 from Rs 913, according to industry sources.
With this, the cost of supplying a 14.2 kg cylinder has risen to over Rs 1,600, and the under-recovery now absorbed on each domestic cylinder is about Rs 700, the government said on Sunday.
According to the Petroleum Ministry, the scale of this is visible in the fully market-priced commercial cylinder. The 19-kg cylinder used by hotels and restaurants sells in Delhi at Rs 3,113.50, about Rs 164 a kg, after five increases during the West Asia crisis.
The domestic household, by contrast, pays about Rs 66 a kg after the revision. Commercial gas carries a higher rate of tax and larger margins, so it sits above the household’s cost-reflective level. Even so, the import-linked cost of a domestic cylinder works out to over Rs 1,600, the ministry informed.
The latest revision follows a Rs 60-per-cylinder increase announced on March 7 after the conflict in the Middle East disrupted global energy markets and pushed up international fuel prices. Despite that increase, oil marketing companies were reportedly unable to fully recover mounting losses on domestic LPG sales.
Industry sources said state-run fuel retailers were estimated to be losing around Rs 703 on every domestic LPG cylinder sold prior to the latest price revision. The fresh hike is expected to partially offset those losses, although companies are still believed to be under financial strain due to high import and supply costs.
The LPG price increase comes amid a broader rise in fuel prices across the country. Petrol and diesel prices have been increased by a cumulative Rs 7.50 per litre since mid-May, while compressed natural gas (CNG) rates have risen by around Rs 6 per kg during the same period.
According to industry estimates, oil companies continue to sell petrol and diesel below cost despite the recent revisions. Retailers are reportedly incurring losses of about Rs 11 per litre on petrol and Rs 33.6 per litre on diesel, reflecting the impact of higher global crude oil and refined fuel prices.
Global energy markets have remained volatile in recent months, with geopolitical tensions in the Middle East continuing to influence crude oil and fuel prices worldwide.
As the conflict tightened the Strait of Hormuz, through which roughly a fifth of the world’s oil and a large share of India’s energy imports pass, most commercial traffic in the waterway was brought to a near halt.
About 54 per cent of India’s LPG consumption was routed through the Strait, leaving the cooking-gas supply directly exposed to the disruption.
By the end of the last financial year, the cumulative under-recovery on domestic LPG reached Rs 60,000 crore, up from Rs 41,338 crore the year before, and the Union Cabinet has approved compensation of Rs 30,000 crore to the marketing companies on this account.