09:22
Oil-marketing companies (OMCs) are suffering an under-recovery of Rs 700 on every cylinder of domestic liquefied petroleum gas (LPG) despite the latest price hike of Rs 29 per 14.2 kilogram cylinder, the ministry of petroleum and natural gas said on Sunday.
This is the second such increase within three months, as the energy shock from the West Asia crisis pushes global fuel price benchmarks to record highs.
The cost of supplying a cylinder has gone up to over Rs 1,600 measured against a Saudi Contract Price benchmark price for LPG that has risen by 46 per cent since February 28, the ministry said.
'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 hikes during the West Asia crisis,' the ministry said, adding that by contrast, the domestic household pays Rs 66 per kg after the revision.
After the latest hike -- effective June 7 -- the price of a domestic LPG cylinder has gone up from Rs 913 to Rs 942 in Delhi for the general consumer, and an effective Rs 642 for Ujjwala households. The nationwide increase in cooking gas prices follows a Rs 60 per cylinder hike announced on March 7, 2026.
The under-recovery -- the gap between the international cost of the molecule and the regulated retail price -- is absorbed by the public sector OMCs and compensated, in part, by the exchequer.
By the end of the last financial year, the cumulative under-recovery on domestic LPG reached Rs 60,000 crore, up from Rs 1,338 crore the year before, and the Union Cabinet has approved compensation of Rs 30,000 crore to the OMCs on this account.
The LPG price hike comes on the back of increased rates of other fuels. Petrol and diesel prices have been raised by a cumulative Rs 7.50 per litre since mid-May, while compressed natural gas (CNG) prices have risen by around Rs 6 per kg.
'As the conflict tightened the Strait of Hormuz, through which 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,' the ministry said.
It added that the effective Ujjwala price of the first four cylinders at Rs 642 is at a discount of about 60 per cent to the actual international price of an LPG cylinder, and the non-PMUY price of Rs 942 is at a discount of about 45 per cent to the international price.
-- Sudheer Pal Singh, Business Standard
