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LPG Price May See A Hike Next Week

If allowed, this will be the fifth increase in cooking gas rates across all categories - households using subsidised gas for cooking and heating purposes, non-subsidised fuel and industrial-sized gas. LPG rates were last hiked by Rs 15 per cylinder on October 6, taking the total increase in rates since July to Rs 90 per 14.2-kg cylinder.

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Cooking gas LPG prices may be hiked next week after under-recovery on the fuel widened to over Rs 100 per cylinder, sources said insisting that the rate hike, including the quantum of increase, is dependent on government permission. If allowed, this will be the fifth increase in cooking gas rates across all categories - households using subsidised gas for cooking and heating purposes, non-subsidised fuel and industrial-sized gas.

LPG rates were last hiked by Rs 15 per cylinder on October 6, taking the total increase in rates since July to Rs 90 per 14.2-kg cylinder.

Sources with direct knowledge of the matter said state-owned oil marketing companies have not been allowed to align retail selling price with the cost, and no government subsidy has so far been approved to bridge the gap.

The under-recovery or losses on LPG sales have mounted to over Rs 100 per cylinder after international energy prices soared to multi-year high, they said.

While Saudi LPG rates have jumped by 60 per cent to USD 800 per tonne this month, international benchmark Brent crude oil is trading at USD 85.42 per barrel.

"LPG is still a controlled commodity. So, technically, the government can regulate the retail selling price. But, when they do that the oil companies have to be compensated for the under-recovery (or losses) they incur on selling LPG at rates below the cost," one of the sources.

The government last year eliminated subsidies on LPG by bringing retail prices at par with the cost through periodic hikes. But, unlike petrol and diesel, whose pricing has been decontrolled, the government has not official announced deregulation of LPG rates.

"So far, there is no indication that the compensation or subsidy will be restored as the gap between cost and retail price has widened," the source said.

In case the government is not willing to bear subsidy, retail prices have to increase, he said adding that the increases might be moderated to spare consumers of any steep burden.

Currently, cooking gas costs Rs 899.50 per cylinder in Delhi and Mumbai, and Rs 926 in Kolkata. This is the rate that domestic households - who are entitled to 12 cylinders of 14.2-kg each at subsidised rates, poor households that got free connections under the Ujjwala scheme and industrial users pay. 


(PTI)


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