The Union government today confirmed that it was sending subsidies on LPG cylinders directly to customers' bank accounts.
The clarification came in response to a query on what actions the government was taking to protect customers from the relentless increase of LPG prices in India.
"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. However, for domestic LPG, Government continues to modulate the effective price to consumer. The subsidy, as admissible, is credited to the bank accounts of eligible beneficiaries. In addition, Government has started a targeted subsidy of Rs. 200 per 14.2 Kg cylinder for Pradhan Mantri Ujjwala Yojana (PMUY) beneficiaries for upto 12 refills a year for years 022-23 and 2023-24.," said Hardeep Singh Puri, minister of petroleum and natural gas, in the Rajya Sabha today.
There have been several complaints from customers over the last two years that they are not getting the Rs 150-200 of subsidy in their registered bank accounts as part of the DBT or direct benefit transfer scheme.
PRICING PROBLEMS
The minister was asked the reason why LPG cyclinder prices are not being cut even though crude oil prices have come down considerably after hitting a peak of around $118 per barrel in May last year. For the past seven months, crude prices have been in the $60-$80 range.
In contrast, the price of one LPG cylinder in Chennai has been either static or rising for the past one year. For example, they were stable at Rs 1,068.50 until February, when they were increased to Rs 1,118.50, and have been at that level since.
In Delhi, the price of one 14.2 kg cylinder for domestic use was at Rs 581 rupees in May 2020, and have since then climbed consistently to Rs 1,103 by March this year. There has been no price cut for LPG despite the sharp fall seen in the price of crude oil.
This is despite the fact that the oil marketing companies got Rs 22,000 crore of taxpayer money to compensate them for 'under-recoveries' made during the period of a spike in crude oil prices in 2022.
Puri said oil marketing companies were forced to increase the price of LPG cylinders as the price of Saudi propane -- the international benchmark price for LPG -- went from $415 in FY21 to $712 in FY23.
However, prices have not fallen in sync with international prices since then.
In June this year, for example, Saudi Aramco cut the price of propane to $450 per tonne. The current price of propane in Saudi for August delivery is $475. LPG prices, meanwhile have remained at their highest levels since March this year (see chart).