The entire mathematics of subsidy on domestic gas cylinders i.e. LPG in the country is going to change. According to the information, last month government oil companies have signed annual supply contracts with American exporters. Because of which the government is considering changes in the formula of LPG subsidy. In the current situation, the subsidy is calculated on the basis of Saudi Contract Price (CP), which is a standard for LPG supplies from West Asia. However, government oil companies are now insisting on including the American Standard Price and the logistics costs involved in trans-Atlantic shipment in the formula. LPG coming from the US is economical for India only if the price discount compared to Saudi CP is high enough to cover the logistics cost, which is about four times higher than that of shipments from Saudi Arabia.
First long term contract from America
Last month, Indian Oil Corp, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd signed a one-year contract to import about 2.2 million metric tonnes per annum (MMTPA) of LPG from the US for the 2026 contract year. This is about 10 percent of India’s annual LPG import. Although Indian companies have previously purchased American LPG in the spot market, this is their first long-term contract for supply from the country. The government controls the price of LPG sold to households by government companies. When companies incur losses by selling at prices below the market rate, the government compensates them.
Will LPG become expensive?
As mentioned above, the logistics cost of LPG coming from America will be four times more than that from Saudi. If the Indian government has to provide gas cylinders to the common people at the current subsidy, then it is very important to get relaxation in American supply. If this does not happen then the government can cut the subsidy given to the common people in the coming days. This means that from common people to crores of customers coming under Ujjwala scheme, LPG gas cylinders may get costlier.
What is the current price?
According to IOCL data, at present the price of domestic gas cylinder in the country’s capital Delhi is Rs 853 with subsidy. Whereas the price of commercial gas cylinder is Rs 1,580.50. The last change in the price of domestic gas cylinder was made on 8 April 2025. Then the price of domestic gas cylinder was increased by Rs 50 by the government. On the other hand, at present, under the Ujjwala scheme, a subsidy of Rs 300 is given to the users. By December 1, 2025, the number of beneficiaries of Ujjwala scheme in the country is 10.35 crore. In the current financial year, 25 lakh beneficiaries have been added under this scheme. Whereas the total number of LPG users in the country is around 33 crores.