ExplainedEnergy
LPG prices explained: why the restaurant cylinder rises every month and your kitchen cylinder does not
The 19-kg commercial LPG cylinder went up again on Sunday, its third rise in three months, while the 14.2-kg household cylinder stayed at ₹942 in Delhi. How the two prices are set, who carries the gap, and what it means for eateries and homes.
The short answer
Commercial LPG is priced off the market. Oil marketing companies revise it on the first of every month in line with international benchmarks, chiefly the contract price Saudi Aramco sets each month, so a rise in Gulf prices reaches hotels, restaurants and sweet shops almost at once. The household cylinder is held well below cost: in June the government put its supply cost above ₹1,600 against a Delhi price of ₹942, a loss of about ₹700 a cylinder that oil companies carry and the government partly makes good. Ujjwala beneficiaries get a further ₹300 a refill.
Why are there two prices for the same gas?
Because the government shields households and leaves businesses to pay the market rate. The 14.2-kg cylinder used in homes and the 19-kg cylinder used by hotels, restaurants, dhabas and sweet shops carry the same cooking gas. But their prices are set in very different ways.
From Sunday the commercial cylinder costs ₹2,820 in Delhi, ₹10 more than in October, and ₹2,971 in Kolkata, where the rise was ₹17. The household cylinder is unchanged at ₹942 in Delhi. Per kilogram, a household pays about ₹66, while a business now pays about ₹148.
How is the commercial price set?
It moves with world prices, every month. The Ministry of Petroleum and Natural Gas has described commercial LPG prices as “market-determined and directly linked to international benchmarks”, and said that “revisions in commercial LPG prices reflect movements in global LPG prices and associated costs.”
The main benchmark is the Saudi Contract Price, or CP, which Saudi Aramco announces at the start of each month for propane and butane, the two gases that make up LPG. India imports about 60% of its LPG, and its landed cost is tied to the CP. For November, Aramco raised propane by $40 to $720 a tonne and butane by $50 to $780 a tonne. Public sector oil marketing companies, led by Indian Oil, Bharat Petroleum and Hindustan Petroleum, then reset the cylinder price on the first of the month.
Why has it been so volatile this year?
Because the war in the Gulf has upended supply. About 54% of the LPG India consumes has normally come through the Strait of Hormuz, which remains shut. The blended Saudi CP rose from $542.50 a tonne in February to $790 in June. In Delhi the commercial cylinder had climbed to ₹3,113.50 by June, after five increases during the West Asia crisis.
Prices then eased over the summer before turning up again. Across the three revisions since August, the Delhi commercial cylinder has risen by ₹82. It still costs about 77% more than a year ago, when it sold for ₹1,590.50.
And the household cylinder?
Its price is held far below what it costs to supply. The household price was raised twice this year, by ₹60 on 7 March and by ₹29 in June, to ₹942 in Delhi. Even so, the ministry said in June that the cost of supplying a 14.2-kg cylinder had crossed ₹1,600, leaving oil companies with an under-recovery of about ₹700 a cylinder.
“What the household does not bear the brunt of is the several hundred rupees a cylinder which the government is bearing,” the ministry said. The Union Cabinet has approved ₹30,000 crore to compensate the oil companies, against cumulative under-recoveries put at ₹60,000 crore by the end of 2025-26.
Household and commercial LPG compared
What do poorer households pay?
About ₹642 a cylinder. Families with connections under the Pradhan Mantri Ujjwala Yojana get ₹300 a refill through direct benefit transfer, on top of the general price. The scheme covers more than 10.58 crore connections, according to the ministry. By its own comparison, a household cylinder in Delhi is cheaper than in Pakistan (₹1,046), Nepal (₹1,207), Bangladesh (about ₹1,225) or Sri Lanka (₹1,241).
What does it mean for you?
Eating out may cost a little more. Commercial gas is a direct cost for eateries and sweet makers, whose gas use peaks in the run-up to Diwali, and many may pass the rise on. Households are protected for now, but the gap between cost and price does not disappear. It sits on the books of the oil companies and, through compensation, the government. As long as Hormuz stays closed and Gulf prices stay high, that bill keeps growing, and the pressure for another household increase grows with it. The next commercial revision is due on 1 December.