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Richa Mishra

New Delhi, Jan. 4 After witnessing a significant drop in rates, consumers of non-domestic liquefied petroleum gas (LPG) may have to pay a marginally higher price for the product in February.

LPG prices for non-domestic use are reviewed on a monthly basis by the retailers in tandem with international prices.

“With LPG prices in the international market moving up by about $ 40 a tonne the prices in the local market are also expected to harden next month,” industry sources told Business Line. LPG prices are ruling close to $380 a tonne.

“The impact of the current international price is felt in the subsequent month, as there is a time lag of four to six weeks between the international and domestic commercial LPG prices,” industry sources said. The domestic price depends on the Saudi Arabian price and currency value during the month under review. Simply put, the domestic pricing is based on the formula of M-1 (price of the previous month). Hence, the February price would depend on the international price of January.

The prices of non-domestic LPG that had dropped Rs 245-280 for every 19-kg cylinder in December saw a further dip of Rs 170-190 in January. The LPG is currently sold for Rs 655-775. The dip in the 19-kg cylinder LPG prices has also narrowed down the prevailing price difference with the 14.2-kg cylinder domestic LPG (cooking gas).

The gap of almost Rs 900 which existed about 7-8 months ago has come down on an average to Rs 350-400.

Currently, a non-domestic LPG is available at Rs 658.22 a 19-kg cylinder in Delhi, while a 14.2-kg cylinder is sold at Rs 304.70.

With the narrowing of the price difference the diversion of domestic LPG for commercial use – such as hotels – was also expected to come down, according to industry sources.

However, the dip in prices in December and January has not exactly boosted the growth in the commercial category.

Commercial LPG has been seeing a growth of about seven-eight per cent, Mr S.K. Hazra, President, Indian LP Gas Industry Association, said. “The dip in prices has, however, boosted the auto gas sector. The sector saw a growth of 20 per cent in December. This is expected to remain at the same level this month also,” he said.

Besides, in the 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 to make it attractive for consumers.

More Stories on : Petroleum | Petroleum

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