New Delhi: The Union Cabinet has approved a compensation of Rs 30,000 crore to public sector oil marketing companies (OMCs) for under-recoveries on the sale of domestic liquefied petroleum gas (LPG), the government said in a statement on Friday. Oil companies incurred a loss of Rs 40,000 crore in FY25 to keep LPG prices affordable, Petroleum Minister Hardeep Singh Puri had said in May this year.
According to the statement, the decision was taken at a meeting chaired by Prime Minister Narendra Modi. The amount will be distributed among Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) by the Ministry of Petroleum and Natural Gas. Payment will be made in 12 tranches.
The government noted that international LPG prices remained elevated through 2024-25 and continue to be high. However, the increase in costs was not passed on to consumers, leading to “significant losses” for the three OMCs. Despite this, the companies maintained continuous supplies of domestic LPG cylinders at regulated and affordable prices.
According to the statement, the compensation will help the companies meet critical requirements such as crude oil and LPG procurement, servicing debt and sustaining capital expenditure. This will ensure uninterrupted supply of LPG cylinders to households across the country.
The government said the step reflects its commitment to protect consumers from volatility in global energy markets while maintaining the financial health of state-run OMCs. It also reaffirmed its objective of ensuring clean cooking fuel for all domestic LPG consumers, including those under schemes such as the Pradhan Mantri Ujjwala Yojana.
(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)