LPG price movements: Monthly hikes set to return, in a smaller dose

The government is likely to reintroduce the monthly price increase on cooking gas but  with a lower one of Rs 3 or Rs 2 a cylinder, compared with the Rs 4 a month it started from June. 
 

In December, oil marketing companies (OMCs) had refrained from the monthly increase in price of liquefied petroleum gas (LPG) cylinders. 

Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPC) and Bharat Petroleum Corporation (BPC) will target the subsidy towards people below the poverty line, including Pradhan Mantri Ujjwala Yojana (PMUY) consumers. 

“Around 190 million consumers get the benefit of subsidy. We want to re-organise it to the needy through some policy measures. There is no plan to do away with the subsidy completely, as of now,” said a person close to the development. 

According to the Petroleum Planning and Analysis Cell (PPAC), the subsidy on cooking gas for a cylinder was Rs 251 in December. Total consumption has recorded growth for 51 months in a row. The growth was 6.7 per cent in November and cumulative growth was 8.8 per cent from April to November in 2017. Of the five regions, the north had the highest share in consumption at 31 per cent, followed by south at 28.7 per cent, west at 22.1 per cent, east at 15.8 per cent and the northeast at 2.3 per cent during April to November. 

As of November, India had around 251.1 million domestic LPG consumers —121.2 million with IOC, 64 million with BPCL, and 65.9 million with HPCL. However, only 214 million are active consumers, according to the PPAC. 

During 2016-17, LPG consumption in India saw a rise of almost 10 per cent to 21.5 mt, against 19.6 mt in 2015-16. The   government was also successful in adding another 32.2 million below poverty line customers through the PMUY since July 2016.

For the first six months of the financial year, cumulative subsidy claims on LPG and kerosene sent to the petroleum ministry stood at Rs 9,079 crore, set to increase further with the recent rise in international prices.

Import of LPG and petcoke accounted for 76.3 per cent of petroleum product imports during November, while LPG alone accounted for 41.9 per cent of total petroleum, oil and lubricants imports. About 98.4 per cent of total LPG import  was from West Asia  during the month.