Commercial LPG Gets Major Price Cut by Rs 192, ATF Becomes Costlier from August 1

In a move that offers significant relief to hotels, restaurants and other commercial establishments, state-owned oil marketing companies (OMCs) have reduced the price of commercial LPG cylinders by Rs 192 with effect from August 1. At the same time, aviation turbine fuel (ATF) has become costlier by Rs 5 per litre, increasing operating costs for airlines.

Following the latest revision, the price of a 19-kg commercial LPG cylinder in Delhi has fallen to Rs 2,738, down from Rs 2,930. Meanwhile, ATF prices have increased to around Rs 115 per litre from Rs 110 per litre, according to price notifications issued by oil companies.

The reduction marks the second consecutive monthly cut in commercial LPG prices after a Rs 183.50 reduction on July 1, signalling an easing of international LPG prices following the sharp spike witnessed during the West Asia conflict earlier this year.

Commercial LPG prices had surged dramatically after geopolitical tensions disrupted global energy supplies. Between February and June, the cost of a 19-kg cylinder had jumped by nearly Rs 1,373, rising from Rs 1,740.50 to a record Rs 3,113.50. The latest two reductions have partially reversed those increases, providing much-needed relief to businesses that rely heavily on LPG for daily operations.

Oil companies have also reduced the price of market-priced 5-kg LPG cylinders to Rs 762 from Rs 808.50, further benefiting commercial users.

In contrast, the increase in aviation turbine fuel prices reverses last month's decline and is expected to add pressure on airline operating expenses. Since ATF accounts for nearly 35-40 per cent of an airline's operating costs, sustained increases in fuel prices could influence airfare trends if higher input costs persist.

The monthly revisions reflect changes in international benchmark fuel prices and foreign exchange rates, with retail prices varying across states depending on local taxes such as VAT.

There was no change in domestic LPG prices, with the 14.2-kg household cylinder continuing at Rs 942. Domestic LPG prices were last revised upward on June 7, when they increased by Rs 29 per cylinder, following an earlier Rs 60 hike in March amid global supply disruptions.

Highlighting the financial burden on oil companies, Indian Oil Corporation Chairman A S Sahney recently stated that the company is currently incurring an under-recovery of Rs 503 on every 14.2-kg domestic LPG cylinder, as retail prices remain significantly below the actual cost.

Petrol and diesel prices also remain unchanged, extending the status quo after the hikes implemented in May.

The latest fuel price revisions underscore the differing trajectories in global energy markets. While easing LPG prices are expected to support the hospitality and food services sector by reducing input costs, higher ATF prices could weigh on airline profitability and potentially influence ticket pricing if international crude and aviation fuel prices remain elevated.