Major OMCs step off LPG price-hike pedal; absorb Rs 100 per cylinder

Public-sector oil-marketing companies (OMCs) are moderating the price of cooking gas in a bid to maintain affordability effectively, harking back to the days when they were bearing the subsidy burden of petroleum products.

According to executives in the know, IndianOil, Hindustan Petroleum, and Bharat Petroleum are holding back liquefied petroleum gas (LPG) price hikes by around Rs 100 for a 14.2-kilogram domestic cylinder.

"The price of LPG sold by Saudi Arabia has gone up steeply, from $483 a metric tonne in May to $797 in October. But OMCs are moderating the price of LPG and not transmitting the full hike to consumers," said an executive.

During the same period, the cost of a domestic cylinder was raised from Rs 809 to Rs 884.5, without the government crediting subsidy to the account of eligible beneficiaries.

"At present prices, OMCs are absorbing Rs 100 per domestic cylinder," said an executive.

According to another executive, LPG is still a regulated commodity and the central government can dictate the price at which it ought to be sold.

Despite price moderation, there are no plans to reintroduce a budgetary subsidy, thereby turning over the full burden to OMCs.

While there is no official subsidy on a domestic cylinder in Delhi, the Centre continues to subsidise freight costs in some states.

The amount of subsidy in each case varies, but is less than Rs 30 apiece.

This is being done to reduce unevenness in the effective price of a domestic cylinder across the country.

OMCs are also keeping petrol and diesel prices reined in. According to executives, "In expectation of a correction in crude oil and petroleum product prices in the international market, OMCs have only made moderate increases in retail prices of petrol and diesel so far."

The price of Brent crude oil crossed $80 per barrel after major oil-producing countries decided to cap output.

The Organization of the Petroleum Exporting Countries and its allies decided to stick to their gradual approach for restoring output, which was slashed during the pandemic.

The countries agreed to add only 400,000 barrels of crude oil per day in November, pushing up international prices.