Key facts
- Indian state-controlled refiners' losses on LPG sales narrowed nearly threefold in August compared to July.
- The revenue loss per household LPG cylinder decreased to $1.97 (188 Indian rupees) in August.
- This is down from a loss of $5.25 (500 rupees) per cylinder in July.
- The Indian government compensates fuel retailers for these losses, but with a lag and below market rates.
- Supply disruptions stemming from the Middle East conflict and the closure of the Strait of Hormuz have impacted India's LPG imports.
India's major state-controlled refiners, including Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum, have experienced a significant reduction in losses on household liquefied petroleum gas (LPG) sales during August. This improvement, reported by India's junior oil minister Suresh Gopi, narrows the revenue loss per cylinder to $1.97 from $5.25 in July.
The government compensates these fuel retailers for their losses, though this compensation is often delayed and below market rates. The current situation is exacerbated by supply chain disruptions linked to the conflict in the Middle East and the closure of the Strait of Hormuz, a critical chokepoint for 90% of India's LPG imports.
In response to the supply crunch, India has increased imports from regions not reliant on the Strait of Hormuz, incurring higher costs and longer transit times. The government has also urged refiners to boost domestic LPG production and has redirected supply from industrial users to households to ensure availability. Furthermore, efforts are underway to expand city gas pipeline networks as an alternative to LPG cylinders.