Losses from retail sale of LPG fall amid high crude prices

At a time when surging crude oil prices are pushing up revenue losses of the government-owned oil marketing companies, the loss from retail sale of cooking gas has fallen 3.26 per cent from Rs 316 per 14.2-kg cylinder to Rs 306 per cylinder.

The oil marketing companies "" Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) "" are currently losing over Rs 550 crore per day, up from around Rs 470 crore a month ago, as they sell petrol, diesel, cooking gas and kerosene. Prices of crude oil and petroleum products have risen by over 27 per cent since this January.

However, global prices of cooking gas prices (liquefied petroleum gas or LPG) have seen a sharp fall last month. Prices fell nearly 7.8 per cent from $875 per tonne in December 2007 to $811 per tonne in April 2008. The May revenue losses, or the difference between market prices and subsidised prices, are calculated taking into account global prices in April.

"The fall in global LPG prices have been the only bright spot in an otherwise grim market for us," said a senior official with IOC, the country's largest marketer of petroleum products. He added that if global cooking gas prices had not fallen in April then the daily revenue losses would have gone over Rs 570 crore. 
 

RETAIL LOSSES (RS/LITRE)
	May 1-15	April 16-30
Petrol	14.00	12.50
Diesel	21.00	17.50
Kerosene	28.72	23.23
LPG*	306.00	316.00
* per 14.2 kg cylinder

Revenue losses figures for May, however, may rise as cooking gas prices this month are already higher by around 5.30 per cent to $854 per tonne.

Analysts say that typically prices of LPG decreases in the summer as demand comes down compared with the winters. "In the US and Europe, propane is extensively used for heating. Since propane is a component of LPG it increases demand for the fuel and pushes up prices," said an analyst. 
 

WHAT UNSUBSIDISED PETROL, DIESEL WOULD COST (RS/LITRE)
	Petrol		Diesel
	Subsidised	Unsubsidised	Subsidised	Unsubsidised
Delhi	45.52	59.52	31.76	52.76
Kolkata	48.95	62.95	33.92	54.52
Mumbai	50.51	64.51	36.08	57.08
Chennai	49.61	63.61	34.40	55.40

The lesser demand for LPG in the country is also being reflected in the fall in prices of the fuel in the thriving black market. While a kilogram of LPG was selling at around Rs 80 per kg in the black market in February this year, it costs around Rs 33 per kg now.

"Very few people come to buy LPG now. We are having to reduce prices," said an LPG seller in one of east Delhi's lanes.

The lower global prices has also resulted in price of the fuel used in automobiles being cut by 83 paise per litre in Delhi to Rs 33.41 per litre on May 1 from Rs 34.24 per litre in April. Prices of automobile LPG are not controlled by the government. The oil companies revise prices every month according to global market prices.

The auto LPG prices have also bucked a trend as oil companies as well as the petroleum ministry are calling for a 'mild' increase in prices of petrol and diesel.