After the local liquefied petroleum gas price rose by $Indian households continue to pay much less for cooking gas than consumers in neighboring countries and many developed economies, the Ministry of Petroleum and Natural Gas said on Sunday.
The ministry also said that the beneficiary of the Pradhan Mantri Ujjwala Yojana (PMUY) is actually paying $642 for a 14.2 kg LPG cylinder, while the general consumer in Delhi pays $942. You have now exceeded the actual cost of supplying the same cylinder $1600.
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The government has increased the prices of domestic LPG cylinders by $Work is scheduled to begin on January 29 from Sunday, due to the sharp rise in international costs caused by the West Asian crisis, according to news agency ANI.
International prices affect LPG costs in India
According to the ministry, the prices of petroleum products in India are linked to their corresponding global market prices. However, the government continues to ease the actual price that households pay for domestic LPG.
Any family can purchase CDs from $942. In addition, PMUY beneficiaries receive a direct transfer of benefits $300 per cylinder in the first four packs every year, which is broadly the average annual consumption of a typical Ujjwala household. As a result, they pay effectively $642 for those packages, and this support remains unchanged.
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Even families not covered by PMUY pay for it, the ministry said $700 less than the market associated roller cost. Retail prices may vary slightly across locations due to distribution costs.
The government says it bears too much of the burden
Explaining the pricing mechanism, the ministry said: “What the family does not bear is the hundreds of rupees that the government bears per cylinder. During the period of sharp increases in international costs, this burden was absorbed at the source instead of being transferred to the consumer.”
Why did costs rise?
The ministry noted that India imports about 60 per cent of its LPG needs and that the landing cost is linked to the Saudi contract price (CP), which is determined monthly by Saudi Aramco.
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Before the unrest in West Asia, the Saudi cost of LPG was around US$543 per tonne in February. After the closure of the Strait of Hormuz in late February, the price of the April contract rose to US$775 per ton, with propane at US$750 and butane at US$800. The price has since risen to US$790 per ton in June.
As a result, the price of blended LPG has risen by about 46 percent since February, raising the cost of imported LPG.
The ministry said that based on the June contract price, the cost of supplying a 14.2 kg cylinder on an import-linked basis rose to more than $1600. The recovery shortfall being absorbed into each local cylinder is now about to occur $700.
Commercial cylinders reflect global prices
Unlike home cooking gas, the price of commercial LPG cylinders used by hotels and businesses is automatically revised every month because it directly reflects international standards.
The ministry said that the price of a 19 kg commercial drum in Delhi is currently Rs $3,113.50 or approx $164 per kilogram, after five increases during the West Asian crisis. In comparison, a household pays approx $66 per kg after last review.
She also noted that commercial gas carries higher taxes and higher profit margins, making its price higher than the level that reflects the cost to households.
Oppose rising prices
On home cooking gas, LPG prices rise by $“When crude oil prices were low, the government did not transfer the benefit to the common people. Now, when the global price has risen, it has been transferred to the people. This government was very anti-people and not looking out for the interest of the people,” Karnataka Minister Yatindra Siddaramaiah told news agency PTI.
“This is causing a big problem because it is making inflation rise significantly. It is a very difficult time for the middle class. The government should have accepted this, explained it to the public, and taken them into confidence. Instead, they kept saying all along that we are Vishwaguru,” Congress lawmaker Vivek Tanka was quoted as saying by PTI.
Measures taken to secure supplies
According to the ministry, domestic production of LPG rose by more than 60 percent, from about 32 metric tons to about 52 metric tons, to compensate for restricted imports.
It also said that sourcing has been expanded to include suppliers around the world, including those that do not pass through the Strait of Hormuz, such as the United States, Canada and Algeria. Priority has been given to LPG supplies available to households and essential users such as hospitals and educational institutions.
On the demand side, consumers have been encouraged to switch to pipelined natural gas where available. To prevent diversion of subsidized domestic LPG into the commercial market, the verification of delivery on OTP basis has been raised to around 90 per cent in coordination with state governments and industry associations.
The Ministry urged people to use this valuable resource carefully and adopt energy-efficient cooking practices.
(with ANI inputs)
