Indian Oil Companies Hike LPG Cylinder Prices And Cut Aviation Turbine Fuel Prices

Indian petroleum and oil marketing companies have raised the prices of domestic and commercial liquefied petroleum gas (LPG) cylinders by Rs. 50 and Rs. 350/ unit, respectively, effective immediately. The hike means that commercial LPG cylinders will now cost Rs. 2,119.50/ unit, and domestic LPG cylinders will cost Rs. 1,103/ unit in Delhi. The price hike follows a previous increase of Rs. 25/ unit last month. LPG prices are determined by state-run oil companies monthly.

LPG Cylinder Price Hike

The price of a 19 kg LPG cylinder has been raised by 19.8% to Rs. 2,119, whereas the price of 14.2 kg LPG has been hiked by 4.7% to Rs. 1,103. The hike is expected to increase the financial burden on households, particularly for those already struggling with high inflation.

Aviation Turbine Fuel Price Cut

Meanwhile, oil marketing companies have slashed aviation turbine fuel (ATF) prices by 4%, resulting in a reduction of ATF prices in Delhi from 1.12 Lk/kL to 1.07 Lk/kL. The move is expected to benefit airlines, who have been hit hard by the Covid-19 pandemic and rising fuel prices.

Impact On Oil Companies

Following the development, shares of oil and gas producers like Oil & Natural Gas Limited (ONGC) and Bharat Petroleum Corporation Ltd (BPCL) surged on the Bombay Stock Exchange. While ONGC’s stock rose 0.65% to hit an intra-day high of Rs. 153.30, BPCL’s stock surged 1.58% to reach Rs. 321 apiece on the BSE. The share prices of Indian Oil Corporation Ltd and Hindustan Petroleum Corporation Ltd (HPCL) also showed marginal gains.

Government Measures

Earlier this month, the Indian government had reduced the excise duty on ATF from Rs. 6 to Rs. 1.5/ ltr, the windfall tax on domestically produced crude oil from Rs. 5,050/ ton to Rs.4,350/ ton, and the tax on diesel exports from Rs. 7.5 to Rs. 2.5/ ltr. These measures are expected to provide some relief to the oil and gas sector, which has been grappling with high fuel prices and losses due to the pandemic.

Insight

The recent hike in LPG cylinder prices and the cut in aviation turbine fuel prices reflect the ongoing fluctuations in the global energy market. While the former may increase the burden on households, the latter may provide some relief to the aviation sector. As crude oil prices continue to remain high, it remains to be seen how the Indian government and oil companies will navigate the current economic climate.

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