Big Change for Ujjwala Beneficiaries: Subsidised LPG Cylinder Limit Reduced to 4

New Delhi: The Central Government has cut the number of subsidised LPG cylinders supplied through the Pradhan Mantri Ujjwala Yojana (PMUY), reducing the annual quota from nine to four.  

The decision was made on Monday, and the government stated that the amended entitlement was determined using the average LPG use pattern of Ujjwala beneficiaries across the country.

Why Has the Subsidised Cylinder Limit Been Reduced?

The Ujjwala scheme, which began in 2016, initially offered recipients with subsidized support for up to 12 home LPG cylinders weighing 14.2 kg each per year. Last year, the restriction was reduced from twelve to nine cylinders. It has recently been cut again, from 9 to 4 cylinders every year.

During a media briefing, Praveen Mal Khanooja, Additional Secretary in the Ministry of Petroleum and Natural Gas, stated that the revised figure is largely consistent with the average yearly LPG use among Ujjwala consumers. 

According to him, the government's goal is to ensure that benefits are supplied in accordance with the actual needs of beneficiaries.

To make cleaner cooking fuel more accessible, the government will implement a targeted LPG subsidy in May 2022. Under this arrangement, beneficiaries receive Rs 200 per 14.2-kg cylinder directly into their bank accounts after purchasing a refill. At that time, the benefit covered up to 12 cylinders every year.

In October 2023, the subsidy was increased from Rs 200 to Rs 300 every 14.2-kg cylinder. A proportional discount was also offered to smaller 5-kg LPG cylinders. 

What Does a Cylinder Cost Ujjwala Consumers Now? 

A normal 14.2-kg household LPG cylinder in Delhi now costs Rs 942 following two recent price increases over the last three months. However, Ujjwala clients continue to receive a refund of Rs 300 per cylinder, lowering their effective cost to Rs 642 per cylinder.

Khanooja stated that the government spends almost Rs 1,600 on the supply of a single LPG cylinder and gives qualified consumers with approximately Rs 1,000 per cylinder in subsidy support. He further disclosed that since 2022, the government had awarded LPG subsidies of over Rs 52,000 crore.

Global Factors Behind LPG Price Pressure

Explaining the latest increase in LPG prices, Khanooja said that domestic LPG prices in India remain lower than international levels despite recent revisions. He cited severe changes in global crude oil and LPG markets during the ongoing West Asia crisis. According to him, public sector oil marketing organizations are currently losing over Rs 700 for each LPG cylinder supplied.

India's LPG import cost is tied to the Saudi Contract Price (CP), which is the global standard for LPG pricing. According to reports, this benchmark has climbed by over 46% since February, owing mostly to supply difficulties associated with the Strait of Hormuz, which have limited petroleum availability from Gulf countries.

Oil Companies Also Losing on Petrol and Diesel Sales

The impact on oil marketing companies extends beyond LPG. According to Khanooja, petrol and diesel are also being sold below cost. According to him, the under-recovery for petrol is roughly Rs 6 per litre, while diesel is under-recovered by nearly Rs 30 per litre.

"Cumulatively, the oil companies are losing Rs 600-700 crore," he said, while explaining the reasons behind recent fuel price increases.

Apart from LPG, oil companies raised petrol and diesel prices by around Rs 7.50 per litre in four consecutive revisions last month. CNG prices have also increased, with rates rising by Rs 6 per kilogram. The latest revisions come as the government attempts to strike a balance between subsidy support for beneficiaries and rising global energy costs, as well as increasing pressure on public sector oil companies.