LPG Price hiked by Rs 50 per cylinder; bulk diesel price hike creates havoc for suppliers

Domestic cooking gas (LPG) price has been hiked by Rs 50 per cylinder in line with a spike in international energy prices. A 14.2-kg non-subsidised LPG cylinder will now cost Rs 949.50 in the national capital. This is the first increase in LPG rates since early October. Prices have been on a freeze since then despite the cost of raw material spiralling.

Sources said a 5 KG LPG cylinder will now cost Rs 349 while the 10 kg composite bottle will come for Rs 669. The 19-kg commercial cylinder now costs Rs 2003.50.

Meanwhile, Dual pricing for bulk and retail consumers of diesel has not gone down well with the industry. The hike in bulk diesel price by up to Rs 25 per litre is comparatively much higher than Rs 0.80/litre hike announced for retail fuel.

According to sources, private retail operator Reliance’s Jio-bp has already cut supplies of fuel to retail outlets by 50%. It would focus on exports to garner higher margins. Jio-bp and Nayara Energy may be forced to shut their retail outlets like they did in 2008 if the auto fuel prices are not hiked in alignment with under-recoveries.

Historically, bulk prices are offered at a lower rate compared with retail prices and helps them secure their needs. However, the latest hefty hike for bulk consumers is likely to have an adverse effect on sate-run road transport corporations, commercial establishments, malls, etc, who buy bulk diesel to meet daily operation needs.

Diesel sales constitutes roughly 40% of the total petroleum product sales by OMCs where bulk diesel sales constitute roughly 15-18% of total diesel sales. While OMCs are expected to make some recovery on their marketing margins with the price hike, the bulk buyers are queuing up at the retail outlets to maintain their operational viability. Reduction in excise duty and VAT, and staggered price hike is what the industry was hoping for to bring some semblance of regularity in auto fuel prices. 

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