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Policy & Regulations

Commercial gas cylinder price hike flares up hotel food bills by 10-20%
Monday, November 26, 2012 IST
Akshay Kalbag, Mumbai

The recent hike in the price of commercial gas cylinders will have an adverse impact on food production, and hoteliers and restaurateurs across the country claim they have no choice but to pass on this additional burden to the consumers in the form of jacked up bills.

With the new gas cylinder prices in place, the increase in the food & beverage bills in hotels & restaurants could now be in the range of 10 to 20 per cent.

Further, hotel owners have unanimously stated that the gas cylinder price hike would add to their daily expenditure.

Hence, apart from the rate hike that hotels & restaurants have resorted to, they will also go in for revision in the menu.

Kamlesh Barot, president, Federation of Hotel and Restaurant Associations of India (FHRAI), informed, “The price of a commercial gas cylinder has gone up by nearly 15 per cent, from Rs 1,400 to Rs 1,600.”

He added, “Unit costs have also gone up. And we (restaurateurs and hoteliers) have no choice but to charge the customers more for the services they avail, irrespective of whether they come merely to eat out or stay in a hotel.”

Maverik Mukerji, general manager, ibis Navi Mumbai, said, “There won't be a big impact on the rooms, but food prices will now increase by three per cent. The gas cylinder hike will have a direct impact on the hotel industry.”

Delhi

According to oil marketing companies in the national capital, the hike in the price of non-subsidised domestic cooking gas by Rs 26.50 (to Rs 922 per cylinder) is justified, as there has been a marginal increase in international rates as well.

“That is the price that consumers will have to pay with effect from November 2012 after exhausting the cap of six cylinders per year. For capped cylinders, the price – Rs 410.42 – remains unchanged,” they said.

The gas companies said the loss they incur on each such cylinder has increased by Rs 10 – from Rs 468.50 to Rs 478.50, adding that the annual cap of half-a-dozen for domestic cooking gas cylinders per year has been in place for the last two months.

The price of non-subsidised domestic cooking gas undergoes revision every month, and in October 2012, a cylinder cost Rs 895.50 in New Delhi. The standard commercial 14.2 kg liquefied petroleum gas (LPG) cylinder will now cost Rs 1,105.50 in the capital.

The oil companies said the 19 kg bottle would now cost Rs 1,551. The 14.2 kg commercial or non-domestic cylinder was earlier priced at Rs 1,075. Similarly, the 19 kg cylinder earlier cost Rs 1,536.50.

The rate of the non-subsidised 14.2 kg cylinder and those of the commercial bottles of the same size vary because of the exemption from customs and excise duties on non-subsidised LPG cylinders for domestic consumption. This will reduce the price burden on the common man.

Kerala

There is no uniformity in the increase of food prices in Kerala, but on an average the prices of meals have gone up by Rs 5-10. For instance, while the price of a masala dosa has gone up by Rs 3-5, non-vegetarians would feel the pinch because biryani would now cost them Rs 90 or Rs 100.

“The hike is based on the expenditure incurred. Some of us have no choice but to hike the prices of tea and coffee, because the price of Milma milk has gone up by Rs 5. But a few haven't, because they procure milk from other companies,” several restaurateurs said.

The aforementioned company has also hiked its price, and other milk companies are likely to follow suit. And it is not only the rising unit costs, but also the fact that cooking gas has registered a considerable increase of late.

The restaurateurs from the southern state added, “Not only are gas cylinders currently in short supply, but over the past one month, their price has also gone up from Rs 1,000 to Rs 1,500. We are procuring the same from private agencies, who have also hiked their prices.”

“And there are many who have no choice but to purchase the same from distant places. When we do that, we also have to bear a hefty cost for the transportation of the cylinder,” a district chief of the hoteliers' and restaurateurs' body said.

A few eateries seem reluctant to hike prices, because they feel it will have an adverse impact on their customer base. Some are willing to hold on, in the hope of a drop in the cooking gas prices. In the event of that not happening, they would consider a hike in the food prices.

However, not all are unhappy with the rising prices. It spells great news for the employees of these eateries, whose wages will witness a hike. And of course, the Food Safety and Standards Act (FSSA), 2006, mandates maintenance, the charges for which will also go up.



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