NEW DELHI: Govt on Monday raised the price of household LPG (liquefied petroleum gas) for all categories, including subsidised refills supplied to poor families under the ‘Ujjwala’ scheme, and increased the special additional excise duty (SAED) on petrol and diesel by Rs 2 per litre — dashing hopes of a fuel price cut by siphoning part of the gains from falling oil prices .
From Tuesday, Ujjwala households in Delhi will have to shell out Rs 553 for each 14.2-kg cylinder against Rs 503, while general category consumers, who do not get subsidy, will pay Rs 853 against the market price of Rs 1,028.50. Prices in other states will vary in accordance with prevalent tax rates. LPG prices were last revised in March 2024 when they were cut by Rs 100 per cylinder.
Oil minister Hardeep Singh Puri defended the government’s moves, saying they were required in view of a Rs 41,338 crore hole in the oil marketing companies’ pockets left by rising benchmark rates in 2024-25 despite subsidy for 10.3 crore Ujjwala beneficiaries.
Assuring that Ujjwala consumers will continue to get subsidy, Puri said the increased refill prices are expected to yield Rs 5,000-7,000 crore to the state fuel marketers for covering under-recoveries on LPG in the current fiscal.
The higher SAED will not make motor fuels costlier as gains from falling oil prices will offset the impact but yield about Rs 32,000 crore for the exchequer, which can be used to compensate the state fuel retailers for losses on LPG. After the hike, SAED on petrol stands at Rs 13 per litre and Rs 10 on diesel.
According to ICRA’s Prashant Vashisht, marketing margins of oil companies will remain healthy despite higher SAED, as crude is expected to remain depressed in the wake of Donald Trump’s tariff war.
No wonder, Puri held out hope of relief, saying petrol and diesel prices can still be reduced if crude remains at the current low levels. The govt had between Nov 2014 and Jan 2016, raised excise duty on petrol and diesel on nine occasions to mop up gains from plummeting global oil prices.
The latest duty hike essentially sucks up a gain of Rs 2 per litre in the base price of petrol and diesel that would have accrued to the companies from Tuesday owing to sliding crude, which tumbled from $77 per barrel on March 31 to $63-64 — the lowest in four years — on Monday. By opting to tweak the SAED, the Centre has ensured it will not have to share the proceeds with the states, which would have been the case if had tinkered with the basic excise duty.
