Mint Explainer: LPG price trend, impact on consumers and steps to curb the rise
gas prices after the Ukraine war. However, since the majority of Indian population relies on LPG, it comprises a major part of a household budget making it a politically sensitive commodity. As a result, the price rise of a 14-kg LPG cylinder has not seen an increase in line with global prices.
Recently, the ministry of petroleum and natural gas, in a response to question on rise in gas prices, outlined the price tend and factors thereof. Mint breaks this down: India imports more than 60% of its domestic LPG consumption requirement. Prices of LPG in the country are based on Saudi Contract Price (CP), the benchmark for international prices of LPG.
In its response to the question in Parliament, the petroleum ministry said that during 2020-21 to 2022-23, the average Saudi CP went up from $415 per MT (metric tonne) to $712 per MT. The ministry, however, said that the increase in international prices was not fully passed on to retail consumers. Government data showed that during the period under review, LPG prices in the national capital rose by ₹359 from ₹744 to ₹1,103 per cylinder.
As the increase in international prices were not fully passed on to consumers, oil marketing companies (OMC) suffered under-recoveries of around ₹28,000 crore on sale of domestic LPG. To compensate this, the government approved a one-time compensation of ₹22,000 crore to OMCs in FY23. Further, during the Covid-19 pandemic, the Centre also provided about 14.17 crore free LPG refills to Pradhan Mantri Ujjwala Yojana (PMUY) households under Pradhan Mantri Gareeb Kalyan package during 2020.
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