OMCs Facing Bearing Under-Recovery Of ₹700 on Domestic LPG Despite Price Hike

Oil marketing companies (OMCs) continue to incur an under-recovery of nearly ₹700 on every domestic LPG cylinder despite a ₹29 increase in cooking gas prices, the government said on Sunday.

The cost of supplying a domestic LPG cylinder has risen to over ₹1,600 due to higher international LPG prices, according to a report by The Times of India.

The government attributed the rise to the sharp increase in global energy prices following the West Asia conflict, which disrupted supplies and pushed up benchmark Saudi Contract Prices (CP).

Saudi CP increased nearly 46% from $543 per tonne before the disruption to $775 per tonne in May, and has further risen to $790 per tonne in June.

While petroleum product prices in India are linked to international benchmarks, the government said it has moderated the effective price paid by domestic consumers, keeping it below levels in several other countries.

Following the latest revision, a 14.2-kg domestic LPG cylinder in Delhi costs ₹942, up from ₹913. Beneficiaries of the Pradhan Mantri Ujjwala Yojana (PMUY) will pay an effective ₹642 per cylinder after receiving a subsidy of ₹300 per refill.

However, PMUY beneficiaries now receive the subsidy on four refills annually, down from nine refills announced last year.

This marks the second increase in domestic LPG prices since energy supplies were disrupted following the closure of the Strait of Hormuz amid the conflict. Prices were earlier raised by ₹60 per cylinder in March. Commercial LPG prices, which are deregulated, have been revised five times during the same period. OMCs have also increased petrol, diesel, and CNG prices four times each to partially offset losses from higher global crude and natural gas prices.

The price of a 19-kg commercial LPG cylinder, commonly used by hotels and businesses, is revised monthly based on international benchmark rates. In Delhi, it currently costs ₹3,113.50, or about ₹164 per kg, compared with domestic consumers paying around ₹66 per kg following the latest revision.

The government said that during periods of significant international cost increases, a substantial portion of the burden has been absorbed rather than fully passed on to consumers.

It added that the under-recovery, separate from subsidies, represents the gap between international costs and regulated retail prices. The under-recovery on domestic LPG is estimated at around ₹60,000 crore in FY26, up from ₹41,338 crore in the previous fiscal year.