The Hindu Business Line : Non-domestic LPG may cost less

New Delhi, Nov. 23 Both the players and the customers of non-domestic liquefied petroleum gas (LPG) have something to look forward to next month. Public and private players of the product are betting on a significant drop in prices to revive their fortunes, as it would push demand.

In keeping with the prices in the international market, price of LPG sold for non-domestic purpose is expected to dip in December. The international market has seen the biggest drop in LPG pricing by $320 a tonne from $810 a tonne in September-October.

Industry sources told Business Line that the The price of commercial LPG, which is sold in a 19-kg cylinder at over Rs 1,000 a cylinder, is expected to come down by Rs 350. The dip in commercial LPG prices would also mean that the diversion of domestic LPG for commercial use will be reduced to some extent, as the price gap between the two categories would narrow.

Auto gas sector to gain

Due to high prices, the growth in auto gas sector was almost nil in the first six months of the current fiscal. However, the coming six months should be good, industry sources said. The auto gas sector had seen a growth of nearly 40 per cent in last fiscal. However, a robust growth can be expected only next fiscal, industry sources added. Commercial LPG has seen a growth of about seven-eight per cent.

The domestic prices of commercial LPG are reviewed on a monthly basis. In November, the prices increased by a little over 1 per cent, as international prices had seen an upward movement in October and the rupee had depreciated by almost 20 per cent.

While the price of commercial LPG was increased to Rs 1,108.50 a cylinder (Rs 1,095.24 a cylinder in October), that of auto LPG was brought down by 5.34 per cent. Auto LPG prices were revised to Rs 34.38 a litre on November 1 (Rs 36.32). In case of auto LPG, the public sector oil marketing companies are under pressure to keep it at a price lower than the price of petrol in order to make it attractive for the consumers.

“There is a time lag of four to six weeks between the international and domestic LPG prices. The domestic price depends on the Saudi Arabian price and currency value during the month under review,” an official explained. In other words, the domestic pricing is based on the formula of M-1 (price of the previous month). Hence, the December price would depend on the international price of November.

The last one week has seen international LPG prices declining after being stable for sometime, even when there was a sharp slide in crude oil and other petroleum products prices.

LPG for non-domestic purpose is meant for commercial markets such as hotels and for auto LPG.

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