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India
09 Nov 2018

LPG dealers' commission hikes cylinder price by over Rs. 2

LPG price hiked by over Rs. 2

Domestic cooking gas LPG price has been hiked by over Rs. 2 per cylinder after the government increased the commission paid to LPG dealers.

A 14.2kg subsidized LPG cylinder in Delhi will now cost Rs. 507.42, as against Rs. 505.34 previously, according to a price notification of state-owned fuel retailers.

This followed an order of the Oil Ministry that raised the dealers' commission.

In context

LPG price hiked by over Rs. 2
Revised commission: Rs. 50.58/14.2kg cylinder, Rs. 25.29/5kg cylinder

Order

Revised commission: Rs. 50.58/14.2kg cylinder, Rs. 25.29/5kg cylinder

In that order, the Ministry said the domestic LPG distributors' commission for 14.2kg cylinder and the 5kg cylinder was last fixed at Rs. 48.89 and Rs. 24.20, respectively, last September.

It added that pending finalization of De-Novo Study for revision of LPG distributors' commission, it has been decided to revise the commission to Rs. 50.58/14.2kg cylinder and Rs. 25.29/5kg cylinder, as an interim measure.

Details

Commission: Rs. 30.08 establishment charges+Rs. 20.50 delivery charges

The non-subsidized or market price LPG rates will now be Rs. 942.50 per 14.2kg cylinder due to the dealers' commission, which will be made up of Rs. 30.08 establishment charges and Rs. 20.50 delivery charges for a 14.2kg cylinder.

For the 5kg cylinder, the establishment charges have been fixed at Rs. 15.04 and the rest Rs. 10.25 are delivery charges, the order said.

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Government subsidizes 12 cylinders of 14.2kg each per household annually

Subsidy

Government subsidizes 12 cylinders of 14.2kg each per household annually

Customers who collect their refills directly from distributor's premises will continue not to be charged for delivery, the order said.

All LPG consumers have to buy the fuel at market price. The government, however, subsidizes 12 cylinders of 14.2kg each per household in a year, by providing the subsidy amount directly in bank accounts of users.

This subsidy amount varies from month to month.

Mechanism

Government provides higher subsidy when international rates go up

Subsidy depends on the changes in the average international benchmark LPG rate and foreign exchange rate. When international rates move up, it results in higher subsidy.

As per tax rules, GST on LPG has to be calculated at the market rate of fuel.

The government may choose to subsidize a part of the price but taxes will have to be paid at market rates.

GST on higher base-price spiking up LPG cylinder price

GST impact

GST on higher base-price spiking up LPG cylinder price

This is the second increase in rates this month, the earlier being on November 1, when prices went up by Rs. 2.94/cylinder, the non-subsidized or market price of which went up to Rs. 60/cylinder, because of tax component on the base price.

Since June, rates have gone up every month because of GST paid on higher base-price, and cumulatively prices increased by Rs. 16.21.

Among metros, cost of 14.2kg cylinder maximum in Kolkata

Among the metros, the current cost of a 14.2kg LPG-cylinder is highest in Kolkata at Rs. 510.70. Delhi comes next, followed by Mumbai at Rs. 505.05 while in Chennai, it's Rs. 495.39. Rates differ from state to state depending on local taxes and transportation cost.

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