NEW DELHI, Aug 30: Bumper earnings in the first five months of the current fiscal and international benchmark coming off its highs will help state-owned oil companies absorb the Rs 200 per cylinder cut in cooking gas LPG prices, sources said indicating there may be no Government compensation for that.
On Tuesday, the Government announced a Rs 200 per cylinder cut in prices of domestic cooking gas to soften the impact of rising inflation on households as well as counter the promise of cheaper LPG made by the Congress party in upcoming assembly elections.
This resulted in the price of a 14.2-kg LPG cylinder in the national capital coming down to Rs 903 from Rs 1,103 earlier. For Ujjwala beneficiaries, the price will be Rs 703 after considering the continuing Rs 200 per cylinder subsidy.
State-owned Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) posted bumper earnings in the April-June quarter and the trend is continuing in thereafter, Government and industry sources said.
Also, Saudi CP – the price to which domestic LPG rates are benchmarked due to high import dependence – declined from USD 732 per tonne in March 2023 to USD 385 in July. Rates have gone up in August to USD 464 per tonne but still provide enough cushion for oil companies to cut LPG prices, they said.
Oil Minister Hardeep Singh Puri in television interviews on Wednesday said the three oil marketing companies cut the prices as “good corporate citizens” and the extension of “very healthy profits” of April-June (the first quarter of the current fiscal) in the following months will help their decision.
He however did not give a direct reply to questions on the government providing subsidy support for the decision.
Sources said the price cut is on oil companies and the Government has so far not indicated any intention to provide for those.
The three firms booked under-recoveries or losses when Saudi CP had shot up in March/April. The losses are yet to be recovered, they said. (PTI)
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