Cooking gas prices hiked for second time in 12 days

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NEW DELHI: Cooking gas has become costlier for about 305 million consumers as state-run oil firms on Thursday raised the price of domestic liquefied petroleum gas (LPG) by 3.50 per 14.2kg domestic cylinder — the second price hike in less than two weeks.

With the latest hike in the price of cooking gas, a domestic 14.2kg LPG cylinder in Delhi will cost 1,003 per refill, 1,029 in Kolkata, 1,002.50 in Mumbai and 1,018.50 in Chennai.

Domestic LPG suppliers had last raised cooking gas prices by 50 per cylinder on May 7 because of rising international energy costs due to the Ukraine war.

Commercial LPG has also become costlier by 8 per 19 kg cylinder, with the new price at 2,354 in Delhi on Thursday — the seventh hike in this calendar year, according to an Indian Oil Corporation (IOC) price notification.

India’s cooking gas market is dominated by three state-run oil marketing companies – IOC, Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL). The companies had earlier hiked its rate by 50 per cylinder on March 22 this year to 949.50 in Delhi – the first price hike in over a year. Before that, the domestic LPG prices were revised by 15 on October 6, 2021, leading to the price being 899.50 per 14.2 kg cylinder in Delhi.

Even as cooking gas prices have skyrocketed in the last couple of years, the government has substantially reduced subsidy on the fuel. It has phased out the direct benefit transfer (DBT) of cooking gas subsidies in most of the places, including Delhi, and has reduced the financial burden on the exchequer by over 86% from 29,628 crore in 2019-20 to an estimated 4,000 crore in the current financial year, according to official data.

The cooking gas subsidy on domestic LPG through DBT mode has been stopped in many markets, since May 2020, when it was priced at 581.50 per 14.2 kg cylinder. The government, however, continues to subsidise additional transportation costs to consumers residing in far-flung and remote areas, which is often less than 50 per cylinder.

According to the Petroleum Planning and Analysis Cell (PPAC), the data-keeper of the petroleum ministry, total cash transfer to customers under DBT for LPG consumer (DBTL) scheme has been nil since May 2020 in Delhi and some other markets. This value [LPG subsidy through DBT] was 231 and 162.43 per cylinder in March 2020 and April 2020.

The petroleum and finance ministries did not respond to repeated email queries on this matter seeking specific reasons for reducing DBT of cooking gas subsidy sharply since 2020 despite rising prices of domestic LPG. HT had reported the same on May 16.

The shrinkage of the LPG subsidy through DBT mode is also corroborated by the Union Budget. The actual direct benefit transfer of LPG subsidy, which was 29,628 crore in 2019-20 first reduced to 23,667 crore [actuals] in 2020-21. Thereafter, it was trimmed drastically to 3,400 crore in the revised estimates (RE) of 2021-22 from the budget estimates (BE) 12,480 crore. The BE for 2022-23 has been kept at 4,000 crore. There is no official data available on specific details of LPG subsidy through DBT mode – number of the beneficiaries, location of such beneficiaries and amount of unit subsidy paid to them.



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