Will LPG cylinders become more expensive? Government is going to make these changes

Will LPG Cylinders Become More Expensive:  The entire calculation of the subsidy on domestic gas cylinders (LPG) in the country is about to change. According to reports, last month, state-owned oil companies signed annual supply contracts with US exporters. Because of this, the government is considering changes to the LPG subsidy formula. Currently, the subsidy is calculated based on the Saudi Contract Price (CP), which is a standard for LPG supply from the Middle East. However, state-owned oil companies are now pushing to include the US standard price and the logistics costs involved in transatlantic shipments in the formula.

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First Long-Term Contract from the US

Last month, Indian Oil Corp, Bharat Petroleum Corp Ltd, and Hindustan Petroleum Corp Ltd signed a one-year contract to import approximately 2.2 million metric tons per year (MMTPA) of LPG from the US for the 2026 contract year. This is about 10 percent of India's annual LPG imports. Although Indian companies have previously purchased US LPG on the spot market, this is their first long-term contract for supply from the country. The government controls the price of LPG sold by state-owned companies to households. When companies incur losses by selling at prices below the market rate, the government compensates them.

Will LPG become more expensive?

As mentioned above, the logistics cost of LPG coming from the US will be four times higher than that from Saudi Arabia. If the Indian government has to provide gas cylinders to the common people at the current subsidized rate, then a discount on US supply is crucial. If this does not happen, the government may cut the subsidy given to the common people in the coming days. This means that LPG gas cylinders may become more expensive for common people, including the crores of customers under the Ujjwala scheme.

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What is the current price?

According to IOCL data, the current price of a domestic gas cylinder in the national capital Delhi is Rs 853 with subsidy. While the price of a commercial gas cylinder is Rs 1,580.50. The price of a domestic gas cylinder was last changed on April 8, 2025. At that time, the government had increased the price of a domestic gas cylinder by Rs 50. On the other hand, currently, users under the Ujjwala scheme are given a subsidy of Rs 300. As of December 1, 2025, the number of beneficiaries of the Ujjwala scheme in the country is 10.35 crore. 25 lakh beneficiaries have been added to this scheme in the current financial year. While the total number of LPG users in the country is approximately 33 crore.

Summary

The oil companies say that the subsidy calculation should be based on US standards, and that the logistics costs of oil coming from across the Atlantic should also be included, which are four times higher than those from Saudi Arabia