Centre, and not OMCs, to bear the impact of LPG price cut, says Puri

The minister also lauded the Centre's efforts for the sturdy expansion of domestic LPG connection rollouts across the nation - from 14 crore in 2014 to 32 crore, as of now.

The government will take the burden of the Rs 200 price cut announced on domestic cooking gas cylinders, Minister for Petroleum and Natural Gas Hardeep Singh Puri said on August 30, in a relief to oil marketing companies from the Rs 7,500-crore imminent hit to their coffers.

Puri's declaration, in an exclusive interaction with CNBC-TV18, came a day after the government announced the price cuts on domestic cooking gas cylinders.

The Union Cabinet, on August 29, announced the LPG price cut to ease the load of inflation on domestic consumers. The Centre's move had sent initial jitters among the oil marketing companies (OMCs), projecting a cost impact to the tune of nearly Rs 7,500 crore.

Also Read: Govt cuts LPG price by Rs 200/cylinder in major relief for consumers ahead of festive season

'Centre-OMCs need to work together'

The oil minister highlighted that it has always been a question as to who will bear the cost impact of a price drop in the energy sector. He also noted that the Centre and the OMCs need to make joint efforts to economically insulate the common man.

Also Read: LPG price cut: Sops only for Ujjwala consumers, no damages to OMCs

The oil minister, hailing the Narendra Modi-led government for introducing the much-needed price cut in LPG cylinders, said that the Centre's latest move has been welcomed by everyone across the nation. He also lauded the government's efforts for the sturdy expansion of domestic LPG connections.

"Earlier, nearly 45 percent of the country's population was outside the LPG cylinder system, due to supply-chain issues and black market. In 2014, there were 14 crore domestic LPG connections, which has now gone up to 32 crore," Puri said. He highlighted that LPG consumption in the country has increased, on an average.

Both Ujjwala and non-Ujjwala consumers will receive the benefit of a straight price cut of Rs 200, which will insulate them from the current retail inflation.  The minister clarified that the Centre and OMCs have jointly worked in bring about the price cut.

Puri further noted that OMCs have demonstrated a healthy performance in the first quarter of fiscal 2023, and are projected to display a positive and reassuring performance in the second quarter as well. Though they had initially taken a loss, they recovered later, supported by the Centre, said the minister. This, in turn, insulated the nation's economy as well the consumer ecosystem from every kind of macroeconomic shocks.

Hailing the healthy performance of the OMCs, the oil minister also noted that OMCs have demonstrated that they are corporate benefit citizens.

Commenting on the prices of petrol and diesel, the minister said that non-BJP states need to bring down the Value Added Tax (VAT) on petrol & diesel, following which there will be a further reduction in BJP-ruled states.

Oil purchase policy

The minister said that India will purchase oil from all sources at the lowest cost. "We will buy oil from wherever we can get it as long as it is delivered to our point of importation at our ports at the lowest possible price," he noted.

India has been purchasing crude oil from Russia, which has become the biggest exporter of the commodity to the country, at discounted prices since the West imposed sanctions in reaction to its invasion of Ukraine in 2022. The world's third-biggest importer and consumer of oil, India, imports over 80 percent of its oil from overseas.