LPG price goes through the roof

The price of a 14.2 kg domestic LPG cylinder has gone up by Rs. 237.50, a 41% hike, in the last 10 months.


By Nandu G and Hiranmayi K

Bengaluru: Protests broke out in many parts of the country owing to the spiralling price of Liquefied Petroleum Gas (LPG) which has gone up to Rs. 819 for a 14.2 kg domestic cylinder in Delhi on March 1, 2021, from Rs 581.5 in May 2020. It has continuously risen after crude oil prices hit an all-time low in April 2020 at $19 a barrel which is currently at $60.56.

Contrary to the usual monthly increase in LPG prices, February 2021 alone saw four such hikes.

According to the government, the rise in international petroleum prices is to be blamed for this spike. This surge could compel the government to bring back the direct benefit transfer on LPG (DBTL) subsidy, which is credited to users' bank accounts, on cooking gas that was stopped in May 2020 when the pandemic took hold and international prices fell. In these ten months, the price of LPG rose by Rs. 237.5 or 41% per cylinder. Of the 28.8 crore LPG consumers, more than eight crore people have an income below the poverty line and are consumers under the Pradhan Mantri Ujjwala Yojana (PMUY).

The import parity price formula, which is based on international product prices, decides the cost of LPG. Saudi Aramco's contract prices (a benchmark for this calculation), ocean freight charges, customs duties, and port dues are included in the IPP formula. Other factors determining the final price include currency fluctuations, local freight charges, bottling charges, marketing costs, dealer commissions, and Goods and Services Tax.

LPG in India has 60 per cent butane and 40 per cent propane. There is a 171% increase in propane prices and a 148% increase in butane prices since May 2020, when the propane price was at $230 a metric tonne (mt) and that of butane $240 a mt. The government may examine a proposal to extend free LPG cylinders for beneficiaries under PMUY for three months again in FY22. Also announced in the 2021-2022 Budget is 10 million additional beneficiaries to PMUY.

Rising energy prices will fuel inflation in India which is the world’s third-largest oil importer. "The Union Government is only pushing the people into the morass of inflation to earn tax," Congress leader Rahul Gandhi has tweeted. "Raise your voice against the destruction of the country. Join and speak-up against price rise campaign," he added, along with a video in which people are seen protesting against the rising LPG and fuel prices.

All stories that are reported, edited and published on this platform are original, produced by the students and faculty of National School of Journalism, sometimes contributed by guest faculty and speakers. If you would like to contribute, please email us at tannoy@nsoj.in NSoJ is a news organisation and a highly-selective Journalism school that trains India’s best journalistic talents to become ethical journalists who care deeply about truth, justice and democracy. If you are passionate about journalism and care about the core values of journalism as we do, please apply for a place in one of NSoJ’s programmes - Bachelor of Arts or PG Diploma in Journalism at www.nsoj.in.