LPG cylinder rate expected to rise by Diwali, Rs 90 hike in price since July

LPG cylinder price is expected to rise again next month as oil companies are going through a loss due to under-recovery caused by selling cylinders at a price below the cost of purchasing. Companies like Indian Oil, Bharat Petroleum and Hindustan Petroleum are likely to increase the price of LPG after getting the approval of the government.

Sources quoting petroleum companies say that the difference between the cost of an LPG cylinder and the retail selling price has widened to over Rs 100 per cylinder. But the government has not yet sanctioned any subsidy to compensate for this loss.

However, the rate hike including the quantum of increase is dependent on government permission. If the government gives its nod then this will be the fifth increase in cooking gas rates across all categories. LPG rates were last hiked by Rs 15 per cylinder on October 6, taking the total increase in rates since July to Rs 90 per 14.2-kg cylinder.

On subsidy, the government gives only 12 cylinders to a family in a year. This is given only to poor households that got free connections under the Ujjwala scheme and industrial users pay. At present, the price of LPG cylinder available on subsidy in Delhi and Mumbai is Rs 899.50. Whereas its price in Kolkata is Rs 926. 

For general households, the government last year eliminated subsidies on LPG by bringing retail prices at par with the cost through periodic hikes.

The price of LPG has also increased in the international market. In October, its price increased by more than 60% to USD 800 (about Rs 59,895) per tonne. At the same time, Brent crude oil is also trading at USD 85.42 (about Rs 6,395) per barrel.