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The cost of supplying a 14.2 kg domestic LPG cylinder has risen to over Rs 1,600, leaving an under-recovery of about Rs 700 on each cylinder, which is absorbed by the government and public sector marketing companies. The jump follows a sharp rise in the international benchmark, with Saudi Aramco's Contract Price for LPG up about 46% since February due to the Strait of Hormuz disruption.
According to the Ministry of Petroleum and Natural Gas, the blended Saudi CP for a 50:50 propane-butane mix stood at USD 542.50 per tonne in February, before the disruption. After Hormuz tightened Mideast Gulf exports, the April contract rose to USD 775 per tonne and has edged up further to USD 790 per tonne in June. Propane CP climbed 39 per cent and butane 52 per cent in the same period. The landed cost of the imported molecule rose with it, pushing the import-linked supply cost of a domestic cylinder above Rs 1,600. Despite the spike, Indian households continue to pay among the lowest cooking gas prices globally. The general consumer in Delhi pays Rs 942 per cylinder, about Rs 700 below the market-linked cost. PMUY Ujjwala beneficiaries pay an effective Rs 642 on the first four refills each year after a Rs 300 per cylinder direct benefit transfer -- roughly the average annual consumption of a Ujjwala household. Even at Rs 942, non-PMUY households pay about 45% less than the international price, while the effective Ujjwala price of Rs 642 is about 60% below it. Domestic LPG prices have been increased by Rs 29 per cylinder from Sunday amid the rise in cost due to West Asia crisis. The Ministry said that the cumulative under-recovery on domestic LPG reached Rs 60,000 crore by the end of FY25-26, up from Rs 41,338 crore the year before. The Union Cabinet has approved Rs 30,000 crore compensation to marketing companies on this account. The Ministry said that Rs 300 per cylinder subsidy for Ujjwala consumers is over and above this under-recovery and reaches more than 10.58 crore connections. Supply security was maintained through the Hormuz disruption. India was among the few countries that kept energy cargoes moving, with domestic LPG production raised over 60% to 52 TMT to offset constrained imports. Sourcing was widened to the US, Canada and Algeria, while anti-diversion enforcement with OTP-based delivery verification was raised to ~90% to prevent subsidised domestic LPG leaking into the commercial market. As a result, Indian cylinder prices remain far below neighbours and advanced economies: Pakistan Rs 1,046, Nepal Rs 1,207, Bangladesh Rs 1,225, Sri Lanka Rs 1,241, US Rs 1,755, Australia Rs 1,765, Canada Rs 2,411. The ministry urged consumers to adopt energy-efficient cooking practices to conserve the subsidised resource. (ANI)
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