Domestic gas cylinder prices up by 56% in 4 years; hefty drop in subsidy

While a recent hike of Rs 50 in the price of the 14.2 kg domestic liquefied petroleum gas (LPG) cylinder led to the cost of the cylinder touching Rs 1,103, data has disclosed that the price has registered a rise of nearly 56 per cent in the last four years.

The retail selling price (RSP) of a domestic LPG cylinder (14.2 Kg) on April 1, 2019 was Rs 706.50 which increased to Rs 744 in 2020, Rs 809 in 2021 and Rs 949.50 in 2022. The price increased to Rs 1,103 from Rs 1053 on March 1 this year.

While the price of the domestic LPG cylinder has recorded a substantial rise over the last few years, government data disclosed that the total subsidy on LPG has come down significantly over the last few years.

Details of the subsidy on LPG given by the government during each of the last four years showed that it was Rs 37,209 crore in 2018-19 and came down to Rs 24,172 crore in 2019-20, Rs 11,896 crore in 2020-21 and Rs 1,811 crore in 2021-22.

As per the information from the Ministry of Petroleum, the prices of petroleum products including LPG in the country are linked to the price of respective products in the international market. "The average Saudi CP prices on which the domestic LPG prices are based, increased from US$ 454/MT to US$ 693/MT during 2019-20 to 2021-22."

"During 2022-23 the average Saudi CP has further risen to US$ 710 /MT till February 2023. However, the government continues to modulate the effective price of domestic LPG. Public sector oil marketing companies have suffered huge losses on sale of domestic LPG," said the Ministry in a recent Parliament reply.

The Pradhan Mantri Ujjwala Yojana (PMUY) was launched in 2016 to provide deposit free LPG connections to women members of poor households under which 8 crore connections were given. Under Ujjwala 2.0, all PMUY beneficiaries are provided a free first refill and stove as well, in addition to deposit free LPG connections. As on February 1, 2023, 1.6 crore connections have been given under Ujjwala 2.0.

During the Covid-19 pandemic, as a pro-poor initiative, the government announced a scheme for providing upto three free of cost LPG refills to Ujjwala beneficiaries from April 1, 2020 under the Pradhan Mantri Garib Kalyan Package (PMGKP).

Oil marketing companies (OMCs) transferred Rs 9670.41 crore to the bank accounts of PMUY beneficiaries for buying LPG refills and PMUY beneficiaries availed 14.17 crore refills under the scheme. To further encourage LPG usage by PMUY beneficiaries, from May 2022, the government has started an additional targeted subsidy of Rs 200 per 14.2 kg refill to PMUY consumers upto 12 refills in a year for FY 2022-23.

The Ministry has also informed that Public Sector Oil Marketing Companies have suffered huge losses on the sale of domestic LPG. To compensate these losses, the government has recently approved a one-time compensation of Rs 22000 crores to OMCs.