KATHMANDU, Nov 4: Liquefied petroleum (LP) gas bottlers have decided to introduce separate gas cylinders for household and industrial/commercial users, accompanied by differentiated pricing.
A national meeting of the Nepal LP Gas Industry Association (NLPGIA) on Monday decided to allocate 10 percent of total LPG supplies to industrial and commercial consumers with immediate effect. The Ministry of Industry, Commerce and Supplies (MoICS) had earlier urged bottlers to earmark 30 percent of their LPG supplies for this category.
Former NLPGIA president Gokul Bhandari said bottlers will supply 10 percent of their cylinders, painted blue, to industrial and commercial users. Initially, the existing 14.2 kg cylinders will be used for commercial consumption. Over time, these will be replaced by 19 kg, 50 kg and 450 kg cylinders, depending on the scale of consumption by businesses.
The Nepal Oil Corporation (NOC) has long been considering a differentiated pricing system for household and commercial LPG consumers. The measure is expected to reduce the financial burden the state-owned fuel supplier has incurred from LPG sales.
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Under the new arrangement, gas industries will purchase LPG at a price that includes an additional 10 percent margin when placing purchase delivery orders (PDOs). Based on this framework, bottlers will begin repainting existing cylinders blue and supplying them to industrial and commercial consumers.
For the time being, commercial consumers will continue using the existing 14.2 kg cylinders. Eventually, however, industrial and commercial users will receive LPG in 19 kg, 50 kg and 450 kg cylinders.
A task force coordinated by MoICS Joint Secretary Jitendra Basnet has recommended that 14.2 kg cylinders be used exclusively for household consumption. The panel has proposed 19.2 kg cylinders for small hotels and restaurants, 50 kg cylinders for medium-sized hotels, and 450 kg cylinders for five-star hotels and industrial users.
The government currently subsidizes each 14.2 kg LPG cylinder by Rs 495. According to NOC, LPG subsidies impose an annual financial burden of around Rs 10 billion on the corporation. The corporation currently sells LPG at Rs 2,060 per cylinder.
NOC data show that around 65 percent of total LPG consumption is for household use, while the remaining 35 percent is consumed by commercial and industrial users. The government expects that reducing subsidies for non-household consumption will help ease NOC's financial burden.
Meanwhile, the NLPGIA has decided to make VAT-compliant invoices mandatory for all gas transactions from mid-January 2027. Dealers will be given a two-month grace period to register for VAT compliance.
Under existing regulations, businesses with annual turnover exceeding Rs 5 million are required to register for VAT. As a result, dealers with low sales volumes may be unable to continue operating once the rule is fully enforced across the sector.
Industry stakeholders believe the introduction of separate blue and red cylinders will improve transparency in the LPG market. The system is also expected to facilitate easier monitoring of gas sales and consumption data by government authorities.
