Govt defends LPG price increase; Says consumers still get subsidy of Up to…

The government on Monday said domestic LPG consumers continue to receive substantial indirect subsidies even after the recent Rs 29 per cylinder price hike.

New Delhi: The government on Monday said domestic LPG consumers continue to receive substantial indirect subsidies even after the recent Rs 29 per cylinder price hike. According to the Ministry of Petroleum and Natural Gas, non-Ujjwala consumers receive an effective subsidy of around Rs 700 per cylinder, while Ujjwala beneficiaries receive nearly Rs 1,000.

LPG Cylinder Costs Over Rs 1,600

Addressing an inter-ministerial press briefing, Additional Secretary in the Ministry of Petroleum and Natural Gas, Praveen Mal Khanooja, said the actual cost of a 14.2 kg LPG cylinder, based on Saudi Contract Price (CP), exceeds Rs 1,600. However, consumers currently pay only Rs 942.

Khanooja explained that even non-Ujjwala consumers benefit from a significant indirect subsidy of around Rs 700 per cylinder. Ujjwala beneficiaries receive an additional Rs 300 subsidy, taking the total support to nearly Rs 1,000 per cylinder.

OMCs Facing Rs 700 Under-Recovery Per Cylinder

The official stated that Oil Marketing Companies (OMCs) are currently experiencing under-recoveries of approximately Rs 700 on every 14.2 kg LPG cylinder sold. He noted that similar under-recoveries in previous years were compensated by the government through financial support worth Rs 52,000 crore during FY23 and FY24.

LPG Supply Remains Stable Despite West Asia Tensions

Khanooja assured consumers that supplies of crude oil, LPG, and natural gas remain stable despite ongoing geopolitical tensions in West Asia.

Domestic LPG production has been significantly ramped up and reached 53 thousand metric tonnes (TMT) per day on World LPG Day, marking a 60 per cent increase compared to pre-crisis levels.

The government also highlighted improvements in distribution efficiency:

• LPG distributorship backlogs reduced to less than four days.
• Online sender bookings reached 99 per cent.
• Delivery authentication stands at 96 per cent.
• Average daily LPG bookings touched 42 lakh over the last four days.
• Daily deliveries averaged 44 lakh cylinders.

Commercial LPG sales have also recovered to around 6 TMT per month, reaching 70-75 per cent of pre-crisis consumption levels.

Ujjwala Subsidy Limited to Four Cylinders Annually

The government clarified that Ujjwala beneficiaries receive a subsidy of Rs 300 per cylinder for the first four cylinders purchased annually. The cap is based on average household consumption of four to five cylinders per year.

Defending the recent price increase, Khanooja said the Rs 29 hike translates to roughly Re 1 per day for a household using 12 cylinders annually, or around 20 paise per family member per day.

He described the increase as a "very minor hike" when compared to the current under-recovery burden borne by OMCs.