No more subsidy on LPG from March, Govt hikes prices by Rs 4 per month

New Delhi, Aug 1: The government has ordered state-run oil companies to raise subsidised cooking gas (LPG) prices by Rs 4 per cylinder every month to eliminate all the subsidies by March next year, Oil Minister Dharmendra Pradhan said on Monday.

The government had previously asked Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) to raise rates of subsidised domestic LPG (liquefied petroleum gas) by Rs 2 per 14.2-kg cylinder per month (excluding VAT).

Now, the quantum has been doubled so as to bring down the subsidy to nil, he said in a written reply in the Lok Sabha here. Every household is entitled to 12 cylinders of 14.2-kg each at subsidised rates in a year. Any requirement beyond that is to be purchased at market price.

"Public sector oil marketing companies (OMCs) were authorised to increase price of subsidised domestic LPG cylinder by Rs 2 per cylinder (14.2-kg) per month (excluding VAT) with effect from July 1, 2016," he said.

Oil companies had hiked LPG rates on 10 occasions since that go-ahead.

"The government vide its order dated May 30, 2017, has again authorised OMCs to continue to increase the effective price of subsidised domestic LPG by Rs 4 per cylinder effective June 1, 2017, per month (excluding VAT) till the reduction of government subsidy to 'nil', or till March 2018, or till further orders, whichever is earliest," he said.

Oil companies have raised rates twice since then, the last being on July 1 when rates were up by a steep Rs 32 per cylinder -- the steepest increase in six years.

This hike was because of the May 30 order as well as reflection of hiked tax rates under the Goods and Services Tax (GST) regime. Subsidised LPG now costs Rs 477.46 per 14.2-kg cylinder in Delhi. It was priced at Rs 419.18 in June last year.

The rate of non-subsidised LPG, which consumers pay after exhausting their quota of below-market priced bottles, costs Rs 564.

"The price for the other subsidised cylinders (i.e. 5 kg) would be increased proportionately by the OMCs," Pradhan said.

The subsidy on LPG was Rs 86.54 per cylinder for July, he said. There are as many as 18.11 crore customers of subsidised LPG in the country. These include 2.5 crore poor women who were given free connections during the last one year under the Pradhan Mantri Ujjwala Yojna. There are another 2.66 crore users of non-subsidised cooking gas.