New Delhi : Govt LPG Considering changing the calculation of subsidy. That’s because state-owned oil companies signed annual supply contracts with US exporters last month. Till now, the subsidy was calculated based on the Saudi Contract Price (CP), a standard rate for LPG supply in West Asia.
Officials at the state-owned oil company want to factor into the formula US benchmark prices and the higher freight costs of transatlantic shipments. LPG from the US is affordable for India only if the price discount compared to Saudi CP is sufficient to cover shipping costs. Shipping costs from the US are approximately four times higher than from Saudi Arabia. Last month, Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited signed a one-year agreement to import 2.2 million metric tonnes of LPG annually from the US. This contract is for 2026. It represents approximately 10% of India’s annual LPG imports.
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Indian companies have previously purchased LPG from the US spot market. But for the first time they have signed a fixed term contract for supply from the US. The government decides the price at which government-owned companies sell LPG. When companies make losses by selling below the market price, the government compensates them.
Currently Rs 853 per cylinder
The new formula may change the calculation of subsidy. 853 is currently the price of a 14.2 kg domestic LPG cylinder in Delhi. The last change was on April 8. The beneficiaries of Ujjwala Yojana get Rs 300 subsidy. Similarly, a 19 kg commercial LPG cylinder costs Rs 1580.50 in Delhi.
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