Govt does away with monthly hikes in LPG price

The government has withdrawn an earlier order to hike the prices of liquefied natural gas (LPG) or cooking gas by Rs4 per cylinder every month as it was felt to be contrary to the government's Ujjwala scheme to provide free cooking gas connections to the poor.

Accordingly, state-owned oil marketing companies, including Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) have stopped raising LPG prices on a monthly basis from October following an oil ministry order.

However, the price of subsidised LPG was raised by Rs4.50 per cylinder on 1 November to Rs495.69 per cylinder.

OMCs had started raising LPG price in June 2016 with a view to eventually eliminate subsidies.

The retail price of a 14.2-kg LPG cylinder, which was Rs419.18 in June 2016, now stands Rs76.51 higher at Rs495.69.

According to the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry, there is a subsidy of Rs251.31 on every 14.2-kg subsidised LPG cylinde.

Incidentally, the non-subsidised or market priced LPG rates were raised by Rs5 per cylinder to Rs747 a bottle on 1 December. Non-subsidised LPG rates have moved in tandem with their cost since December 2013.

Of the 181 million customers of subsidised LPG in the country, over 30 million are poor women who were given free connections during the last one year under the Pradhan Mantri Ujjwala Yojana.

There are 26.6 million users of non-subsidised cooking gas, including those who relinquished their subsidies voluntarily in response to an appeal by Prime Minister Narendra Modi.

Petroleum minister Dharmendra Pradhan had also earlier said that the government had no plans to increase or decrease basic subsidy on fuels, which would continue to be provided to the needy consumers.

Previously, the oil firms were authorised to increase price of subsidised domestic LPG cylinder by Rs2 per 14.2-kg cylinder per month (excluding VAT) with effect from 1 July 2016. Oil companies had hiked LPG rates on 10 occasions since that go-ahead.

Every household is entitled to 12 cylinders of 14.2-kg each at subsidised rates in a year. Any requirement beyond that is to be purchased at market price.