India Sees Remarkable Expansion in LPG Infrastructure Over the Last Decade

India now has one of the most robust LPG supply infrastructure globally. Before April 2014, nearly 45% of Indian households didn’t have access to clean cooking fuels and were constrained to depend on traditional fuels like cow dung, biomass, firewood etc.

The Growth in LPG infrastructure in the country over past decade is given below:

India imports more than 60% of its domestic LPG consumption. Prices of LPG in the country are linked to its price in the international market. Government continues to modulate the effective price to consumer for domestic LPG. During the period 2020-21 to 2022-23, the average Saudi CP (international benchmark for LPG pricing) went up from $415 per MT to $712 per MT.

However, the increase in the international prices was not fully passed on to the customers. Government has reduced the effective price of domestic LPG by Rs. 200 per 14.2 Kg LPG cylinder with effect from 30 th August, 2023. Under PAHAL Scheme, the domestic LPG cylinders are sold at non-subsidised price and the applicable subsidy to the consumers is transferred directly into their bank accounts. Apart from the direct subsidy to bank accounts to consumers, the OMCs have also been compensated Rs 22,000 crore in FY 2022-23 by Government of India to cover the under-recoveries suffered by them in not passing on the high international prices to the domestic LPG consumers.

W.e.f. 21 st May, 2022, Government has been providing a budgetary support for targeted subsidy of Rs. 200 per 14.2 Kg LPG cylinder for Pradhan Mantri Ujjwala Yojana (PMUY) beneficiaries for upto 12 refills a year for years 2022-23 and 2023-24. Moreover, w.e.f. 5 th October, 2023, the targeted subsidy increased to Rs. 300 per 14.2 Kg LPG cylinder for all Pradhan Mantri Ujjwala Yojana (PMUY) beneficiaries.

The current RSP of domestic LPG at Delhi is Rs. 803 per 14.2 Kg cylinder. With a targeted subsidy of Rs. 300 per cylinder (and proportionately prorated for 5 Kg cylinder), effective cost for PMUY consumers is Rs. 503 per 14.2 Kg cylinder (at Delhi) currently.

Prices of cooking gas in India, after the latest round of reduction, are one of the lowest globally,

and even lower than in most LPG producing nations.

The effective price of domestic LPG cylinder in neighbouring countries as on 01.05.2024 is as

below:

#Source: Petroleum Planning and Analysis Cell

*Effective cost to PMUY beneficiaries in Delhi

Pradhan Mantri Ujjwala Yojana (PMUY) was started in May, 2016 with the objective of providing access to clean cooking fuel to poor households in the country according to a defined criteria. Under PMUY, deposit free LPG connections are provided to adult women from poor households. LPG consumption of PMUY beneficiaries is monitored on regular basis. Consumption of domestic LPG by households depends on several factors like food habits, household size, cooking habits, price, availability of alternate fuels etc. More than 105 crore refills have been taken by PMUY beneficiaries in the last 3 years alone. Per capita consumption of PMUY beneficiaries (in terms of no. of 14.2 kg LPG cylinders taken per year) has increased from 3.01 (FY 2019-20) to 3.95 (FY 2023-24). Further, the Government has taken several steps to encourage consumption of LPG, which include targeted subsidy of ₹300/- per 14.2 Kg refill upto 12 refills/year for PMUY beneficiaries, option of 5 Kg Double Bottle Connection (DBC), swap option from 14.2 kg to 5 Kg, upto 3 free refills to PMUY beneficiaries under Pradhan Mantri Garib Kalyan Package from April 2020 to December 2020 etc.