Hospitality and other commercial establishments got a boost from July 1 when oil marketing companies (OMCs) cut the price of 19-kg commercial LPG cylinders by Rs 183.50. The price reduction as part of the monthly fuel price revision is highly welcomed by businesses that depend on cooking gas heavily. But households will have to wait longer, as domestic LPG cylinder prices are unchanged.
The price of a 19-kg commercial LPG cylinder in Delhi has fallen to Rs 2,930 from Rs 3,113.50 as a result of the recent revision. The reduction is the first cut in commercial LPG prices for the year after months of double-digit increases driven by high international LPG prices and geopolitical tension in the Middle East.
The lower prices will reduce operating costs for restaurants, hotels, roadside eateries, bakeries, caterers and cloud kitchens that consume multiple commercial cylinders each month. Industry experts say that could ease financial pressure on food service businesses that have been grappling with rising input costs.
In a separate development, private fuel retailer Nayara Energy also reduced petrol prices by Rs 5 per litre and diesel prices by Rs 3 per litre, citing softer international crude oil prices.
No change in domestic LPG prices
Even at the level of commercial consumers, there is no change in the price of the standard 14.2-kg domestic LPG cylinder used by households. Oil companies revise LPG prices on the first day of every month, but domestic cylinder rates are often influenced by government policy in addition to global energy prices.
So millions of households across the country will continue to pay the existing cooking gas rates despite the reduction in commercial LPG prices.
Why were commercial LPG prices so high?
Commercial LPG prices have soared sharply in the past several months as supply disruptions and increasing import costs are caused by geopolitical tensions in the Middle East. The shift in global energy markets pushed up international LPG prices and oil companies passed on the price to commercial consumers.
The steepest increase was in May, and it significantly raised operating costs for firms dependent on LPG. While the latest reduction indicates there is a slight easing in global market pressure, commercial LPG prices are still above levels before the price hikes in the past few years.
Who benefits from the latest price cut?
The immediate beneficiaries for commercial establishments are hotels, restaurants, catering firms, bakeries, food stalls, and cloud kitchens, all of which rely on commercial LPG cylinders in large quantities. Lower fuel prices will result in better margins and reduce operational expenses.
But for household consumers, there is no immediate relief. Since domestic LPG prices are unchanged, monthly cooking gas expenses will also be the same until any future revision is announced.
