OMCs Losing ₹700 On Every LPG Cylinder Despite Recent Price Hike: Govt

Oil marketing companies (OMCs) are still losing nearly ₹700 on every domestic LPG cylinder sold despite the recent ₹29 increase in cooking gas prices, according to government data cited by The Times of India.

The government said the cost of supplying a domestic LPG cylinder has risen to more than ₹1,600 due to elevated international LPG prices following disruptions caused by the ongoing West Asia conflict.

According to the report, benchmark Saudi Contract Prices (CP), which are used as a reference for LPG imports, have surged nearly 46% from $543 per tonne before the supply disruption to $775 per tonne in May and further to $790 per tonne in June.

LPG Costs Surge

The increase in global LPG prices has been driven by supply disruptions linked to the closure of the Strait of Hormuz, one of the world's most critical energy shipping routes.

The government said around 54% of India's LPG imports transit through the Strait of Hormuz, making domestic supplies particularly vulnerable to disruptions in the region.

While petroleum product prices in India are generally linked to international benchmarks, the government said it has absorbed a significant portion of the increase rather than passing the entire burden on to consumers.

Following the latest revision, a 14.2-kg domestic LPG cylinder in Delhi now costs ₹942, up from ₹913 earlier.

Beneficiaries under the Pradhan Mantri Ujjwala Yojana will continue to receive a subsidy of ₹300 per refill, reducing their effective cost to ₹642 per cylinder.

However, the number of subsidised refills has been reduced to four annually from nine announced last year.

The latest increase marks the second hike in domestic LPG prices since energy markets were disrupted following the closure of the Strait of Hormuz. Domestic LPG prices were previously increased by ₹60 per cylinder in March.

OMC Losses Continue To Mount

The government clarified that the under-recovery is separate from the subsidy provided to consumers.

It represents the gap between the regulated retail selling price and the actual cost of supplying LPG.

The cumulative under-recovery on domestic LPG is estimated at around ₹60,000 crore in FY26, significantly higher than ₹41,338 crore recorded in the previous financial year.

Meanwhile, commercial LPG prices, which are deregulated and linked directly to international benchmarks, have been revised five times during the same period.

A 19-kg commercial LPG cylinder currently costs ₹3,113.50 in Delhi, translating to nearly ₹164 per kg. In comparison, domestic consumers pay around ₹66 per kg following the latest price revision.

Supply Situation Remains Stable

Despite ongoing disruptions in global energy markets, the government said there is no shortage of petroleum products in the country.

To offset import-related challenges, domestic refiners have increased LPG production by more than 60%, raising output from 32,000 tonnes per day to 52,000 tonnes per day.

The government said these measures have helped maintain adequate domestic supplies even as international energy markets remain volatile.