Second hike amid West Asia crisis pushes domestic LPG price up by ₹89/cylinder

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The price of a 14.2-kg LPG cylinder in Delhi will rise to ₹942 from ₹913 with effect from June 7, according to industry sources. File | Photo Credit: The Hindu

The price of a domestic LPG cylinder has gone up by ₹89 overall since the beginning of the war in West Asia, following the latest hike by ₹29 on Sunday. This was the second increase since the crisis began three months ago.

With the latest increase, the 14.2-kg domestic LPG cylinder costs ₹942 in Delhi, ₹941.5 in Mumbai, ₹968 in Kolkata and ₹957.5 in Chennai. On March 7, the government had last increased domestic LPG prices by ₹60 per cylinder.

There was no increase in the price of the 19-kg commercial LPG cylinder and the 5-kg free trade LPG (FTL) cylinder on Sunday. However, since the war began, prices of both variants have seen multiple hikes, with cumulative increase of ₹1,345 (per commercial LPG cylinder) and ₹323 (per FTL cylinder).

In a statement, the government said that state-owned Oil Marketing Companies are presently absorbing under-recoveries, that is, the difference between effective cost and selling price, on domestic LPG at about ₹700 per cylinder. At current rates, domestic LPG is discounted by about 45% as against current international pricing dynamics, it added.

LPG Price Hike: Government says rates in India among world's lowest despite 46% jump in global benchmark

According to Prashant Vashisht, senior vice-president and co-group head of corporate ratings at ICRA Limited, the latest hike may not suffice for OMCs struggling with under-recoveries.

“The bulk of the LPG in the country is consumed by households which have been insulated from hikes. Also, a major part of the under-recoveries absorbed by OMCs with respect to retail fuels [petrol, diesel and LPG] also comes from LPG,” he stated, adding, “The ₹29 per cylinder hike in domestic LPG would not help a lot, considering the ₹700 per cylinder under-recovery.”

Elaborating on under-recoveries, the government stated that the cost of supplying a 14.2-