Government’s Rs 200 LPG Cylinder Price Cut: Impact on Oil Marketing & Gas Distribution Firms

On Tuesday, August 28, the Indian government reduced the cost of a 14 kg LPG cylinder by a minimum of Rs 200. This step is intended to alleviate the impact of increasing living expenses caused by inflation, as a precursor to significant elections in various states and the Lok Sabha (the lower house of India’s Parliament) scheduled for next year.

“During the occasion of Raksha Bandhan and Onam, the government has chosen to decrease the cost of domestic cylinders by Rs 200,” stated Union Information and Broadcasting Minister Anurag Thakur. “This is a gift from PM Narendra Modi to the women of the country,” he added.

Starting from Wednesday, it will offer advantages to all 33 crore households in India that utilize domestic liquefied petroleum gas (LPG).

Additionally, the price reduction will be extra for approximately 10 crore poor households who are part of the Ujjwala scheme. This will combine with the ongoing Rs 200 per cylinder subsidy, culminating in a total reduction of Rs 400 per cylinder.

At present, a 14.2kg LPG cylinder in Delhi costs Rs 1,103. Effective Wednesday, the price will come down to Rs 903. For recipients of the PM’s Ujjwala scheme, the price will be set at Rs 703. In March, the government had prolonged a subsidy of Rs 200 per LPG cylinder under the PM Ujjwala scheme.

In addition to the decrease in price, the government has also opted to extend an extra 75 lakh Ujjwala connections, thereby increasing the overall count of beneficiaries covered by the program to 10.35 crore.

In July, domestic LPG cylinder prices were raised by Rs 50 by oil marketing companies, marking the third increase following two earlier raises in May.

The subsidy for beneficiaries of the PMUY was initiated in May of the preceding year, as the government unveiled a range of relief measures in response to the escalating global energy costs.

The following companies may be impacted due to this announcement:

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.