The Petroleum and Natural Gas Ministry is considering a marginal hike in the price of LPG cylinder ranging between Rs. 5 and Rs. 16.

The Oil Marketing Companies (OMCs) had recently made a presentation to the Petroleum and Natural Gas Minister Veerappa Moily, arguing that input and delivery costs had not been revised for years. The consequent loss they were suffering was further inflating the under recovery account beyond maintainable levels.

In a note submitted to Mr. Moily, the OMCs sought his approval for a hike in LPG delivery charges, which would lead to an impact of Rs. 16 per cylinder in the hill areas and Rs. 5 in the plains. The OMCs also sought permission to revise delivery charges on a quarterly basis based on actual incurrence, on the lines of what is allowed in the case of diesel, to avoid further under recovery on this account. “In case it is decided to retain the LPG retail selling price at the current level, under recoveries on account of revision of delivery charges in RSP [retail selling price] build-up may be kindly permitted to be claimed under the loss sharing mechanism,” the note states.

The RSP for domestic subsidised LPG cylinder of 14.2 kg is Rs. 410.50 in Delhi. The OMCs argued that the government had permitted revision in diesel retail price on a monthly basis from January this year, resulting in constant increase in transportation charges of LPG cylinders. However, no revision of delivery charges for LPG cylinders had been carried out since 2002. The under recoveries on this account had been increasing year after year and was expected to be around Rs. 600 crore during 2013-14.

Officials in the Petroleum Ministry said any hike on this account would be separate from the regular LPG price revision the OMCs undertake in future.

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