LPG Cylinder Actually Costs Rs. 1,600 But Why Are Consumers Paying Less? Oil Ministry Explains

Oil marketing companies in India are facing major financial pressure as domestic cooking gas and transport fuels are being sold below the market-linked prices, according to information shared by the Oil Ministry.

The government also said that cooking gas availability for households will remain unaffected even as some refineries undergo scheduled maintenance activities.

"Despite the ongoing situation in WestAsia, supplies of crude oil, LPG and natural gas remain stable. We have adequate stocks of petrol, diesel and LPG available in the country." said Praveen M. Khanooja, Additional Secretary,Ministry of Petroleum and Natural Gas.

Domestic LPG Cylinder Costs Around Rs. 1,600

According to the Oil Ministry, the actual market-linked cost of a standard 14.2 kg domestic LPG cylinder is currently around Rs. 1,600. However, consumers are paying much lower prices due to government intervention and pricing policies.

As a result, oil marketing companies are reportedly incurring an under-recovery of around Rs. 700 on every domestic LPG cylinder sold.

"The domestic LPG production has been maximized with domestic refineries and fractionators continuing to produce about 52-53 thousand metric tonnes (TMT) per day, about 60% higher than pre-crisis levels. There have been no reports of dry-out at LPG distributorships. LPG delivery backlogs have been reduced to less than four days, while 99% of LPG cylinder bookings are now made online. The Delivery Authentication Code (DAC) compliance rate stands at around 96%," Praveen further added.

Ujjwala LPG Allocation Reduced

The ministry data also indicates that the allocation of subsidized LPG cylinders under the Pradhan Mantri Ujjwala Yojana (PMUY) has been reduced.

Under the new arrangement, beneficiaries are now eligible for four cylinders per year, compared with nine cylinders earlier.

The Ujjwala scheme is one of the government's flagship welfare initiatives, providing clean cooking fuel access to millions of low-income families across the country.

Petrol and Diesel Also Showing Under-Recoveries

The financial strain is not limited to LPG. The ministry's estimates suggest that oil companies are currently facing under-recoveries of approximately Rs. 6 per litre on petrol and as much as Rs. 30 per litre on diesel forcing fuel retailers to absorb part of the burden.

Overall Loss Estimated at Rs. 600 Crore Per Day

When under-recoveries across LPG, petrol and diesel are combined, the total impact on oil marketing companies is estimated at around Rs. 600 crore per day.

Such losses can have a big impact on the financial performance of state-run fuel retailers, particularly if global crude oil prices keep on rising for an extended period.