The beginning of the new year may prove costly for the common people regarding LPG price. On the first of every month in the country, oil companies review the prices of gas cylinders and this time the possibility of change is more. The reason for this is the new supply contract made by the government oil companies with America, which may affect the domestic LPG subsidy system.
At present, LPG price and subsidy in India is calculated on the basis of the prices of gas coming from Saudi Arabia. But now the picture may change after increasing LPG imports from American exporters. The logistics cost of sourcing LPG from America is almost four times more than that of Saudi Arabia. In such a situation, if the government wants to maintain the existing subsidy, it will have to bear additional expenses. Otherwise, subsidies available to common consumers may be cut.
In November, all government oil companies including Indian Oil, Bharat Petroleum and Hindustan Petroleum signed a one-year supply contract with the US. Under this, about 2.2 million metric tons of LPG will be imported per year, which is about 10 percent of India’s total LPG imports.
If we talk about the current LPG price, the price of domestic gas cylinder in Delhi is around Rs 853 with subsidy, while the commercial cylinder is available for Rs 1,580.50. This possible change may have the biggest impact on the beneficiaries of the Ujjwala scheme, who are currently getting a subsidy of Rs 300.
