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Govt Explains LPG Price Hike: Commercial Cylinders Linked to Global Rates

The Indian government has clarified that the recent price increase for commercial LPG cylinders is directly linked to international benchmark pricing, specifically the Saudi Contract Price. While commercial prices fluctuate with the global market, domestic LPG prices for household consumers have been shielded from these increases and have actually seen significant reductions. To protect vulnerable households, the government provides a targeted subsidy of Rs 300 per cylinder for PMUY beneficiaries, with an approved expenditure of Rs 12,000 crore for the 2025-26 financial year. This protection has come at a substantial cost, with Oil Marketing Companies absorbing losses of approximately Rs 40,000 crore as the government chose not to pass on international price increases to domestic consumers.

Key Points: Commercial LPG Price Hike Linked to Global Benchmarks, Govt Says

  • Commercial LPG prices are market-determined
  • Domestic LPG prices unchanged for households
  • PMUY beneficiaries receive significant subsidy
  • Govt absorbed Rs 40,000 crore loss to protect consumers
  • Saudi Contract Price is the global benchmark
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Commercial LPG cylinder pricing reflects international benchmark pricing: Govt

The government clarifies that commercial LPG prices are market-determined and linked to international benchmarks, while domestic consumer prices remain protected with subsidies.

Commercial LPG cylinder pricing reflects international benchmark pricing: Govt
"Any revision in commercial LPG prices reflects changes in global LPG prices and related costs, while domestic LPG prices for household consumers remain unchanged. - Ministry of Petroleum & Natural Gas"

New Delhi, Jan 1

Amid reports of a Rs 111 increase in the price of commercial LPG cylinders, the Government on Thursday said that commercial LPG prices are market-determined and directly linked to international benchmarks.

Any revision in commercial LPG prices reflects changes in global LPG prices and related costs, while domestic LPG prices for household consumers remain unchanged, Ministry of Petroleum & Natural Gas said.

The ministry said that India imports around 60 per cent of its total LPG requirement.

As a result, domestic LPG pricing is linked to international prices, with Saudi Contract Price (CP) acting as the global benchmark.

"Accordingly, revisions in commercial LPG prices reflect movements in global LPG prices and associated costs. The prices of domestic LPG remains unchanged," the ministry added.

While the average Saudi CP increased by about 21 per cent from $ 385 per metric tonne in July 2023 to $ 466 per metric tonne in November 2025, domestic LPG prices in India were actually reduced by around 22 per cent during the same period.

The price came down from Rs 1103 in August 2023 to Rs 853 in November 2025.

To protect household consumers, the effective price of a 14.2 kg domestic LPG cylinder, which costs around Rs 950, is being provided at Rs 853 for non-PMUY consumers in Delhi.

For beneficiaries under the Pradhan Mantri Ujjwala Yojana (PMUY), the effective price is even lower at Rs 553.

This marks a reduction of nearly 39 per cent for PMUY consumers, compared to Rs 903 in August 2023, highlighting the Government's focus on ensuring continued access to clean cooking fuel for economically weaker sections. There has been no change in these prices.

For the financial year 2025-26, the Government has approved the continuation of a targeted subsidy of Rs 300 per domestic LPG cylinder for PMUY beneficiaries, covering up to nine refills per year.

An expenditure of Rs 12,000 crore has been approved for this purpose -- reinforcing the commitment to affordable clean energy for households.

Despite a rise in international LPG prices during 2024-25, the increased cost was not passed on to domestic consumers.

This resulted in losses of about Rs 40,000 crore for Oil Marketing Companies (OMCs).

- IANS

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Reader Comments

S
Sarah B
The explanation makes sense from an economic standpoint. If we import 60%, prices will be linked to international benchmarks. At least they are being transparent about the mechanism now.
A
Aman W
But what about small restaurants and dhabas? Commercial cylinder price hike of ₹111 is huge for them. They are also struggling. The government should think about some relief for small businesses too. Not just households.
P
Priyanka N
Rs 40,000 crore loss to OMCs? That's a massive subsidy burden. Ultimately, it's the taxpayer's money. While helping the poor is essential, we need a sustainable model. Hope the focus on increasing domestic production continues.
K
Karthik V
The data is clear: international price up 21%, our domestic price down 22%. That's a significant cushion provided to the common man. Credit where it's due.
M
Meera T
As a small caterer, this hike pinches. My input costs keep rising. I understand the global link, but wish there was a middle path for micro-enterprises. We create local jobs.

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