In a candid Press Conference, held yesterday, Hardip Sing Puri gave a briefing to the media and also took wide ranging questions regarding the Price Hike on Domestic LPG. He succinctly indicated the overall business and pricing principles of OMCs regarding consumer POL products and how the Government aims at a balancing act which helps both the consumers and the companies. He essentially went on to say that pricing has to be seen as a continuum and it has both a short term and long term bearing. In a data driven discourse, he put forth, in a nut shell, the reasons for the increase as well future implications.
He went on to state, in India, from a 55% Coverage in 2014 (14.52 Crore) LPG today there is Saturation, near about 33 Crore. India imports more than 60% of its domestic LPG consumption. Prices of LPG in the country are linked to its price in the international market. Government continues to modulate the effective price to consumer for domestic LPG. During the period 2020-21 to 2022-23, the average Saudi CP (international benchmark for LPG pricing) went up from $415 per MT to $712 per MT. However, the increase in the international prices was not fully passed on to the customers. This resulted in public sector OMCs incurring Rs 28,000 crores loss due to under-recoveries. However, the Government approved a one-time compensation of Rs 22,000 crore for oil marketing companies (OMCs) to enable them to operate freely. The Desired retail selling price of a LPG cylinder for Delhi market is Rs 1028.50/14.2 kg cylinder for April 2025. India imports about 60% of the domestic LPG consumed. Price of LPG in the country is linked to its price in the international market. While the average Saudi CP (international benchmark for LPG pricing) rose by 63% (from US$ 385/MT in July 2023 to US$ 629/MT in February 2025), the effective price for Pradhan Mantri Ujjwala Yojana (PMUY) consumers for domestic LPG was reduced by 44% (from Rs. 903 in August 2023 to Rs. 503 in February 2025). Considering the current international benchmark of Saudi CP at higher levels, losses of over approx. 41,338 cr is expected to be incurred in LPG during FY 24-25 by PSU Oil Companies. Prices of cooking gas in India, after the latest round of reduction, are one of the lowest globally and even lower than in most LPG producing nations. The effective price of domestic LPG cylinder in neighbouring countries as on 01.04.2025 is as: follows: Pakistan 1080.59, Sri Lanka 1218.09, Nepal (Kathmandu) 1206.39 while in India, its (Delhi) Rs 803 (Rs 503 for PMUY).LPG prices in China rose in October 2024 due to an upward adjustment of Saudi Aramco-provided quotations amid a rise in demand for heating and blending fuels. Throughout 2024, the Liquefied Petroleum Gas (LPG) market in Europe experienced a period of significant price increases. In October 2024, the attack on Israel by Iran, sent feedstock crude oil soaring and, consequently, made the LPG production costs expensive. South American LPG market witnessed a period of significant price escalation throughout the fourth quarter of 2024.The rise in prices of petrol and diesel in UPA regime was 3-4 times more than NDA regime. The UPA Govt saddled the future Govt with Oil Bonds worth around Rs 1.4 lakh crore repayment of these bonds (~ 3.2 lakh crore -principal and interest) is tying up crucial resources, limiting fiscal space & restricting financial freedom of oil marketing companies (OMCs). State wise comparison of fuel prices (petrol and diesel) for BJP-NDA and non-BJP states is:
(Prices in Rs./ltr. for March’25). Price in BJP-NDA Ruled State / Reference City Price in non-BJP Ruled State / Reference City. For Petrol 90.87 (Itanagar) 100.80 (Chennai), 94.69 (Lucknow) 107.46 (Telangana), 94.70 (Gandhinagar) 102.92 (Bengaluru), 96.43 (Panaji) 107.48 (Kerala), 98.19 (Guwahati) 105.01 (Kolkata). While for Diesel; 80.38 (Itanagar) 92.39 (Chennai), 85.26 (Imphal) 92.62 (Ranchi), 87.81 (Lucknow) 95.70 (Telangana), 90.38 (Gandhinagar) 96.48 (Kerala).
India imports more than 88% of its crude oil requirements. Prices of petrol and diesel are market determined and Public Sector Oil Marketing Companies (OMCs) take appropriate decision on pricing of petrol and diesel. Amidst global energy turmoil in the last few years, India under the leadership of Hon’ble Prime Minister, Shri Narendra Modi stands out as the only country where petrol and diesel prices have decreased in the last two and half years. As a result of Hon’ble Prime Minister, Modi Ji’s proactive measures, reducing excise duties twice between November 2021 and May 2022 by ₹13/litre and ₹16/litre for petrol and diesel respectively, and the recent price cut by OMCs by ₹2/litre for petrol and diesel. India has been able to maintain the steady fuel price rise in India in comparison to some of the most advanced nations and our neighbouring countries and keep our citizens insulated from the global uncertainties while ensuring energy security of the country. OMCs made a net loss of Rs 21000 cr during Apr 22- January 23 due to under recovery in petrol and diesel.
He further stated that today the Crude prices may stand at 60 to 61 Dollars per barrel but this may increase. Even it was to go up to 65 Dollars OMCs would still be comfortable. If the trend of lower crude prices continue it would be passed on to the consumer. As regards the increase in Excise Duty of 2% imposed by the Finance Ministry this is not going to be passed on to the consumer. It was also explained that the increased basically went to the central kitty and the consolidated fund is used to compensate the OMCs for the losses incurred on LPG. It is apprised by the Finance Ministry and put up to the Cabinet Committee which process will be initiated. He stated that some of the media which suggested that increase of Excise will lead to dearer products for the consumers is not correct, the consumer will not get affected. The Rs 50 Increase on Domestic LPG Cylinders does not actually deal with the backlog of losses of the OMCs its merely addressing concurrent recovery. The Backlog remains.
The Minister went on to say that as per personal opinion there may be a reduction in LPG Prices worldwide and we can then bring it down after review. He also mentioned that these decisions are not in respect of facing any headwinds. He mentioned even President Trump expected more and more energy to come into the global market and even before assumed office mare and more energy was coming into the global market. Apart from the OPEC many countries like Brazil, Guyana Surinam even Canada and US which is the largest producer are bringing more and more barrels into the market. Even, Saudia and OPEC are going to bring in 1 Million Barrels into the market. would This is comforting for the consumers, India is the third largest Energy Consumer in the World he went on to say.
This was one of the most informative and well-meaning Press Conferences by the Minister. It cleared several doubts which the media and the common man may be having. It also laid bare some of the misgivings which was created due to hasty and wrong perceptions caused by alarmist reporting by some media houses. NewsIP has always been keeping its esteemed readers abreast of the actual facts and steering them to informed conclusions. We shall continue to keep an eye on News related to the Energy Sector.
Disclaimer : www.NewsIP.in provides news and articles for information only. We strive for accuracy but make no guarantees. Content reflects authors’ views, not ours. We’re not liable for errors, damages, or third-party links. Verify information independently. We may update or remove content anytime.