With the government not paying any subsidy on liquefied petroleum gas (LPG) since May 2020, the current record-high price (`859.5/cylinder in Delhi) of a standard 14.2-kg cylinder has led to rural households spending nearly 10% of their monthly expenditure on the cooking fuel, a study by the Council on Energy, Environment and Water (CEEW) has said.
The report, released on Monday, said 85% households in the country have LPG connections, and 80% of the non-user households cited affordability issues for not having an LPG connection.
CEEW’s findings are from the India Residential Energy Survey 2020 conducted in collaboration with the Initiative for Sustainable Energy Policy before the pandemic in FY20, covering nearly 15,000 urban and rural households across 152 districts in India’s 21 most populous states.
A drop in global crude oil prices, and hence the global LPG product prices, since May 2020 gave the government an opportunity to withdraw the LPG subsidy. The end consumers had not felt the pinch till November 2020 thanks to muted global LPG prices. Even without subsidies, domestic LPG cylinders were costing just around `600, close to the price at which the subsidy kicked in. While the global prices have since risen, the government has not reinstated the subsidy.
India imports more than 55% of its LPG requirement and the cost of an unsubsidised cylinder depends on global rates. Tarun Kapur, secretary of the Union ministry of petroleum and natural gas, said on Monday that “in the last few months, supply has not gone up globally but demand has increased, leading to higher prices”, adding that “refineries [globally] don’t like to produce LPG because distilling petrochemicals can give them more return”.
Kapur said “crude price went up then it came down, and now it is slightly going up, but LPG price did not come down even with fall in crude prices”.
As global rates started rising, the retail price without subsidy of domestic LPG surpassed `800 a cylinder in May, impelling a large section of low-income users not to refill the cylinders. Of the eight crore beneficiaries under the Pradhan Mantri Ujjwala Yojana scheme, 3.2 crore did not refill their LPG cylinders in the first quarter of FY22.
