Subsidised cooking gas prices rise 20% in a year while crude oil falls 40%

New Delhi: Cooking gas subsidy has fallen to zero for many customers as the net price paid by domestic users has risen 20% in the past year even as crude oil rates are down 40%. Some customers are still getting a small subsidy as the final price depends on local transportation cost.

Monthly increase in the net price for subsidised consumers and the recent collapse in global rates has helped end the subsidy. With kerosene subsidy already eliminated since March, the end of the subsidy on liquefied petroleum gas (LPG) is a relief for the government at a time its revenue collection is stressed by the impact of the pandemic on the economy.

The price of a subsidised 14-kg LPG cylinder in Delhi has risen from Rs 497 in June last year to Rs 593. The subsidy for a customer in Delhi has fallen from Rs 240 to zero in the same period. However, this can change if LPG costs rise.

The Petroleum Ministry, Indian Oil, HPCL and BPCL didn’t respond to ET’s query on LPG price hike. But a Petroleum Ministry’s twitter handle, @MoPNG_eSeva, said there would be no cooking gas subsidy for May and June.

“As the LPG prices w.e.f 01.05.2020 have gone down to the lowest near the subsidized price of LPG, there will be no subsidy for the LPG refills delivered in the month of May and June 2020. When there is a variation in LPG prices in future, subsidies will be adjusted accordingly,” it said recently in response to a customer complaint on subsidy.

An industry executive said subsidy is not down to zero for all customers and about Rs 10-12 in subsidy is being given to some customers who are paying a higher market price. Cooking gas prices vary with the last-mile transportation charge.

In a year, the market price of an LPG refill is down from Rs 737.5 per cylinder to Rs 593, primarily due to an oil price crash caused by a severe destruction of demand due to the coronavirus pandemic. LPG is derived from crude oil. In the same period, the subsidised prices have risen by Rs 96 per cylinder to Rs 593 as state oil companies, on the directive of the government, have raised prices every month for all customers since August. The price for customers who obtained gas connection under the Ujjwala scheme rose by Rs 8 in August while for others the rise was Rs 29. Since then the refill rates for Ujjwala customers have also been rising but has stayed at a discount of Rs 21 to other customers.

Prices have risen by Rs 19 per cylinder since March for other customers, while Ujjwala beneficiaries have the option to get three free refills between April and June.

Of the total 28 crore LPG customers in the country, about 1.5 crore customers do not receive subsidy and another 8 crore are Ujjwala beneficiaries. In 2019-20, the LPG subsidy amounted to Rs 22,635 crore, down from Rs 31,447 crore in the previous year.

[Source – Economic Times]


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