LPG cylinder price in India among world’s lowest despite Rs 1600 supply cost and Rs 700 loss per refill

The financial burden of supplying domestic cooking gas has climbed sharply, with the cost of delivering a standard 14.2-kg LPG cylinder now exceeding Rs 1,600. Despite the steep rise in international fuel prices, consumers continue to pay significantly less, leaving an under-recovery of nearly Rs 700 on every cylinder that is being absorbed by the government and public sector oil marketing companies.

The widening gap between market-linked costs and retail prices comes amid continued volatility in global energy markets following disruptions in the Strait of Hormuz, a critical route for energy shipments from the Middle East.

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Global shock drives costs higher

According to the Ministry of Petroleum and Natural Gas, international LPG prices have risen sharply over the past few months, substantially increasing India’s import bill.

The blended Saudi Aramco Contract Price (CP) for a 50:50 propane-butane mix stood at USD 542.50 per tonne in February. Following disruptions affecting exports through the Strait of Hormuz, the benchmark climbed to USD 775 per tonne in April and further increased to USD 790 per tonne in June.

The ministry said both key LPG components witnessed substantial price escalation during this period.

International price change

• Blended Saudi CP: Increased from USD 542.50 per tonne in February to USD 790 per tonne in June.
• Propane prices: Rose by around 39 per cent during the period.
• Butane prices: Registered a steeper increase of nearly 52 per cent.
• Supply cost impact: The surge pushed the import-linked supply cost of a domestic LPG cylinder beyond Rs 1,600.

Consumers still paying below market cost

Even after the latest increase of Rs 29 per cylinder, domestic LPG prices remain significantly below actual procurement and supply costs.

From Sunday, the price of a 14.2-kg domestic LPG cylinder in Delhi has been revised to Rs 942. The ministry noted that this remains substantially lower than the market-linked cost.

For beneficiaries under the Pradhan Mantri Ujjwala Yojana (PMUY), the effective cost is even lower due to the direct subsidy support provided by the government.

Current consumer pricing

• Delhi retail price: Rs 942 per cylinder.
• Estimated market-linked cost: More than Rs 1,600 per cylinder.
• Under-recovery: Approximately Rs 700 on each cylinder supplied.
• PMUY beneficiaries: Effective price of Rs 642 after direct benefit transfer support of Rs 300 per cylinder on eligible refills.

Under-recovery burden grows

The ministry said losses incurred on domestic LPG sales have increased sharply over the past year as global prices continued to rise.

The cumulative under-recovery on domestic LPG reached Rs 60,000 crore by the end of FY 2025-26, compared to Rs 41,338 crore in the previous financial year.

To support oil marketing companies, the Union Cabinet has approved compensation amounting to Rs 30,000 crore.

Officials clarified that the subsidy provided to PMUY consumers is separate from this compensation mechanism and continues to benefit more than 10.58 crore connections across the country.

India among the lowest-priced LPG markets

The ministry highlighted that domestic LPG prices in India continue to remain considerably lower than those prevailing in several neighbouring countries and advanced economies.

The ministry said the current pricing structure reflects the government’s effort to shield households from global fuel shocks while ensuring uninterrupted supply during a period of heightened international uncertainty. It also urged consumers to adopt energy-efficient cooking practices to make optimal use of the subsidised fuel resource.

LPG cylinder prices compared

• India (Delhi): Rs 942
• Pakistan: Rs 1,046
• Nepal: Rs 1,207
• Bangladesh: Rs 1,225
• Sri Lanka: Rs 1,241
• United States: Rs 1,755
• Australia: Rs 1,765
• Canada: Rs 2,411

Supply lines kept intact during crisis

Despite disruptions affecting global energy routes, authorities maintained uninterrupted LPG availability across the country.

The ministry said domestic production was significantly ramped up to reduce dependence on constrained imports. Additional sourcing arrangements were also established with multiple countries to strengthen supply security.

• Domestic LPG production: Increased by more than 60 per cent to 52 TMT.
• Alternative sourcing: Imports expanded from countries including the United States, Canada and Algeria.
• Leakage prevention: OTP-based delivery verification coverage increased to nearly 90 per cent to prevent diversion of subsidised cylinders.