What could have prompted the latest hike in commercial LPG prices? | Explained
The latest available government data reported that India’s state-owned oil-marketing companies were incurring under-recoveries of ₹188 per cylinder in early August, down from ₹500 per cylinder in July and more than ₹700 per cylinder in June
The story so far: After two successive months of decline in LPG prices, oil-marketing companies hiked prices of the commercial variant of the bottled hydrocarbon gas by approximately ₹10 per cylinder across the country on Tuesday (September 1, 2026). The 19-kg cylinder in Delhi now costs ₹2,747.5 per cylinder whilst the price of the 14.2-kg cylinder remains unchanged.
Industry observers state the latest hike in the commercial segment primarily caters to offset the under-recoveries (that is, the losses OMCs incur because of the difference in prices at which they sell to consumers against the price they should receive for meeting the cost of production and distribution) for the domestic segment.
The latest available government data reported that India’s state-owned oil-marketing companies were incurring under-recoveries of ₹188 per cylinder in early August, down from ₹500 per cylinder in July and more than ₹700 per cylinder in June.
According to government data, the packaged domestic segment accounted for 90.4% of all LPG consumption in the country during April and June this year.
Further, about 10.6 crore Pradhan Mantri Ujjwala scheme beneficiaries – approximately 33% of the domestic segment - receive an additional subsidy of ₹300 per cylinder.
In other words, while the 14.2 kg LPG cylinder costs ₹942 in Delhi, a Ujjwala beneficiary can avail it for ₹642 per cylinder.
Speaking to The Hindu on Tuesday (September 1, 2026), Prashant Vashisht, senior vice president and co-group head, corporate sector ratings, at ratings agency ICRA, said, “At present, the under-recovery on domestic LPG cylinders is hovering at about ₹200 per cylinder. Thus, the latest hike potentially tries to somewhat compensate for that amount, although the proportionate sales of commercial LPG are much smaller [compared to the domestic variant]. I would not read much into it,” Mr. Vashisht said.
On the supply side, imports of petroleum, oil and lubricants (POL) products registered a decline of 45.1% between April and July this year, according to data from the government’s Petroleum Planning and Analysis Cell (PPAC). It attributed this to “reduction in imports of liquefied petroleum gas (LPG), pet coke and fuel oil (FO) etc.”
However, essential to note that India’s oil-marketing companies ramped up their daily production of bottled hydrocarbon gas from 34,000 metric tonnes to 55,000 metric tonnes to offset the impact of lower imports.
Further, following an August 13 directive, India’s upstream companies, along with private and public oil-marketing companies have been set a daily production target of 63,810 metric tonnes.
Speaking to The Hindu earlier, Manpreet Singh, treasurer at the National Restaurants Association of India (NRAI), said the impact of the latest hike, standalone, would be “negligible” although it may prompt concerns about price increases in the future.
“Today’s hike in itself is negligible. The concerns are primarily about there being potential hikes in future,” he said, adding, “This could increase the overall operating cost for restaurants, coinciding with food inflation, which would increase the burden.”
Although it is essential to note the impact from the industrial segment, which requires the bottled hydrocarbon gas to run their furnaces, such as in the glass-making industry and elevated demand is expected to seep in because of the festive season.
The segment too is increasingly transitioning to piped natural gas, seeking secure and consistent supplies. According to data from the Petroleum and Natural Gas Regulatory Board (PNGRB), industrial sales of piped gas increased by 30% between April and June this year compared to the same period last year.