Commercial LPG Cylinder Prices Spike Over 10% in Delhi Amid Global Turmoil
In a significant development impacting businesses and industries, the price of commercial LPG cylinders has surged by more than 10% in New Delhi, escalating from Rs 1,883 to Rs 2,078 effective Wednesday. This sharp increase is directly attributed to the soaring global gas prices, exacerbated by ongoing military conflicts in energy-rich West Asia. The 19-kg LPG cylinders, predominantly utilized by industries, restaurants, and eateries, are now substantially more expensive, reflecting the volatile international market conditions.
Third Consecutive Monthly Hike for Commercial Cooking Gas
This marks the third price increase for commercial cooking gas within the past month alone. Starting from Rs 1,768.5 on March 1, the rates have climbed steadily, imposing a heavier financial burden on commercial users. The revised prices vary across major Indian cities: Kolkata will see cylinders priced at Rs 2,208, Mumbai at Rs 2,031, and Chennai at Rs 2,246.5. In contrast, domestic consumers using 14.2-kg cylinders are shielded from this hike, with the government and oil retailers absorbing the additional costs to provide relief to households.
Oil Marketing Companies Face Massive Under-Recoveries
The petroleum ministry has disclosed that oil marketing companies (OMCs) are currently incurring an under-recovery of Rs 380 per commercial LPG cylinder at present price levels. Cumulative losses are projected to reach a staggering Rs 40,484 crore by the end of May. For the fiscal year 2024-25, total losses are estimated at Rs 60,000 crore, with half shouldered by oil public sector undertakings (PSUs) and the remaining half absorbed by the central government. This strategic intervention aims to insulate consumers from the high international LPG prices that have skyrocketed due to geopolitical tensions.
Global Petroleum Price Surge Impacts Fuel Markets
Officials have further revealed that OMCs are grappling with under-recoveries on other fuels as well, with Rs 24.4 per litre on petrol and Rs 104.9 per litre on diesel at the retail level. This situation stems from global petroleum prices soaring by up to 100% over the past month, driven by supply chain disruptions and heightened demand. In a related move, IndianOil has increased the prices of 100-octane petrol and premium diesel by Rs 11 and Rs 1.5 per litre, respectively. However, these premium fuels, which are deregulated, constitute only about 1% of total automobile fuel sales, leaving regular petrol and diesel prices unchanged for now.
Deregulated Market and Supply Chain Challenges
The petroleum ministry emphasized that commercial LPG cylinder prices are deregulated and market-determined, subject to monthly revisions based on global trends. The April 1 price adjustment was necessitated by a dramatic 44% surge in the Saudi Contract Price, which jumped from $542 per tonne in March to $780 per tonne for April. A critical factor behind this spike is the disruption in LPG supplies, with 20%-30% of shipments stuck in the Strait of Hormuz due to regional conflicts. Despite these challenges, commercial cylinders account for less than 10% of total LPG consumption in India, highlighting the broader impact on a niche but vital segment of the economy.
