Global Supply Crisis Forces Indian Oil Companies to Absorb Massive LPG Losses

Despite a recent price hike, public sector firms face an under-recovery of Rs 700 per LPG cylinder amid West Asia tensions.

India’s oil marketing companies continue to absorb significant losses on domestic LPG sales as global supply chain disruptions inflate international fuel benchmarks.

Global maritime disruptions continuously strain India’s oil marketing companies. These firms absorb massive losses despite recent price adjustments. The government recently raised the domestic LPG rate to Rs 942 per cylinder in Delhi. However, the market-linked cost remains significantly higher at over Rs 1,600.

Therefore, public sector companies currently face under-recoveries of Rs 700 per cylinder. This financial burden stems directly from the ongoing West Asia crisis. The conflict essentially halted crucial shipping traffic through the Strait of Hormuz. Consequently, international fuel prices surged dramatically over the past few months.

The Saudi Contract Price recently skyrocketed by roughly 46 per cent. Furthermore, India previously imported about 60 per cent of its LPG requirements. Domestic refineries maximise local production to offset these severe import losses. They successfully supply up to 70 per cent of current domestic demand.

Nevertheless, oil marketing companies remain under immense financial pressure. They lose money on petrol, diesel, and cooking gas sales. The cumulative under-recovery reached Rs 60,000 crore for the current financial cycle. Officials noted that the government actively shields households from international price shocks.

Beneficiaries of the Pradhan Mantri Ujjwala Yojana additionally receive a targeted subsidy. These specific households pay effectively Rs 642 for their initial refills. Moreover, Indian LPG prices remain noticeably lower than those in neighbouring nations. Consumers in Pakistan, Nepal, and Sri Lanka pay considerably more for cooking gas.

The government actively rations commercial supplies to prioritise domestic household distribution. Ultimately, officials secure alternative cargo shipments to stabilise the vital energy supply.

(Source: The Indian Express)

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