The supply cost of a 14.2 kg domestic LPG cylinder has risen to over ₹1,600 amid the West Asia crisis, with the under-recovery absorbed on each household cylinder now standing at approximately ₹700, the Petroleum Ministry said on Sunday, 7 June. The disclosure came as the government raised domestic cooking gas prices by ₹29 per cylinder.

The Scale of Under-Recovery

The ministry pointed to the fully market-priced 19-kg commercial cylinder — used by hotels and restaurants — as a reference point. In Delhi, that cylinder currently sells at ₹3,113.50, roughly ₹164 per kg, after five price increases during the West Asia crisis. A domestic household, by contrast, pays approximately ₹66 per kg after the latest revision. The import-linked cost of a domestic cylinder works out to over ₹1,600, the ministry confirmed, underscoring the scale of the subsidy burden being absorbed by the state.

How the Strait of Hormuz Disruption Hit India

The conflict tightened conditions at the Strait of Hormuz, through which roughly a fifth of the world's oil and a substantial share of India's energy imports transit, bringing most commercial traffic in the waterway to a near halt. About 54 per cent of India's LPG consumption was routed through the Strait, leaving cooking-gas supply directly exposed to the disruption. This is not a theoretical vulnerability — it translated immediately into import constraints and cost escalation.

How India Kept Supplies Moving

According to the ministry, India was among the few countries that continued moving energy cargoes through the disruption. Indian-flagged tankers kept transiting the Strait and discharging at Indian ports, carrying crude oil and successive consignments of LPG. The government stated there has been no shortage of any petroleum product, and that bottling and distribution have continued normally across the network.

On the supply side, domestic LPG production was raised by more than 60 per cent — from approximately 32 TMT to 52 TMT — to offset constrained imports. India reportedly brought out the largest number of LPG-laden vessels through the Strait of any country, and did so without paying any toll. Sourcing was simultaneously diversified to suppliers that do not route through the Strait, including the United States, Canada, and Algeria, according to the official statement. Available LPG was directed to households and priority users such as hospitals and educational institutions.

Demand-Side and Anti-Diversion Measures

On the demand side, consumers were encouraged to shift to piped natural gas (PNG) where available, reducing pressure on cylinder supply. To protect scarce domestic stock, anti-diversion enforcement was tightened in coordination with state governments and industry associations. OTP-based delivery verification was raised to approximately 90 per cent, curbing the leakage of subsidised domestic LPG into the commercial market.

Cumulative Under-Recovery and Subsidy Outgo

By the end of the last financial year, cumulative under-recovery on domestic LPG reached ₹60,000 crore, up from ₹41,338 crore the previous year. The Union Cabinet has approved compensation of ₹30,000 crore to marketing companies on this account. Additionally, Ujjwala consumers receive an extra ₹300 per cylinder credited directly to their bank accounts, benefiting more than 10.58 crore connections, the ministry said. The ₹29 price revision, while modest relative to the cost gap, signals that the government is beginning to pass on a portion of the elevated supply cost to end consumers.