LPG’s rising prices in India have become a growing concern for households and markets. Looking ahead, the future of LPG in India presents opportunities for growth, affordability, and a shift towards cleaner energy.
Liquefied Petroleum Gas (LPG) prices in India have increased steadily, causing nationwide household concerns. The pandemic has made it harder for people to make ends meet, and LPG prices have become a top priority because it is an essential commodity that many households depend on.
LPG consumption increased in the majority of the states from 2016 to 2022. However, there were noticeable disparities in the growth rate and demand of the states. The discrepancies are due to the uneven distribution of wealth, population density, and government policies that vary among the states.
According to the Ministry of Petroleum and Natural Gas, the retail selling prices of LPG in Mumbai have increased significantly over the past six years, i.e., from 2016 to 2022. The cost of a 14.2 kg cylinder has increased from Rs 455.99 in April 2016 to Rs 949.5 in April 2022, which is more than a 100% increase.
Recent data shows that the cost of a 14.2 kg LPG cylinder in Delhi has increased from Rs 419.13 in April 2016 to Rs 949.5 in April 2022, with other cities, Kolkata and Chennai, following a close to a similar trend.
In the most recent year recorded, 2021-22, Uttar Pradesh had the top LPG consumption of 3855.4 TMT (thousand metric tonnes), Maharashtra had the second highest LPG consumption of 3307 TMT, approximately double the portion consumed by Tamil Nadu, the third highest with 2375.6 TMT. Meanwhile, Ladakh and Lakshadweep had the lowest LPG consumption, with 8 and 0.8 TMT, respectively.
Why is there an Increase in LPG Prices?
Several factors contribute to the increase in LPG prices in India, including changes in global oil prices, fluctuations in exchange rates, government policies and taxes, and supply and demand dynamics in the domestic market. The price of LPG in India remains determined by multiple domestic and international factors affecting production, transportation, and distribution costs.
The fluctuation of LPG prices can lead to changes in consumption patterns among low-income families, affecting their budgets and causing inflation that impacts the economy as a whole.
The LPG industry remains expected to grow, potentially leading to more affordable consumer prices and a shift towards more sterile household cooking solutions.
In India, Liquefied Petroleum Gas (LPG) distribution for cooking purposes is primarily through cylinders. However, the government has been pushing for adopting piped LPG connections in households.
The piped LPG connection is a direct connection of LPG from a central distributor to the household through a pipeline network. In coordination with the government-owned gas company, authorised distributors install the pipeline connection.
The pipeline connection has several benefits over the traditional cylinder distribution system:
- It eliminates the need for households to physically carry and exchange cylinders, which is often an uphill task.
- It is a more reliable source of LPG supply, as the household can directly access the gas without running out of gas.
The government of India has been implementing the piped LPG connection scheme under the Pradhan Mantri Ujjwala Yojana (PMUY) to provide access to clean cooking fuel to households that were previously dependent on traditional fuels such as wood, coal, and kerosene.