IOC to get Rs 14,486 cr compensation; revenue to be recognised over 12 months

New Delhi: Indian Oil Corporation (IOC) will receive Rs 14,486 crore in compensation, disbursed in 12 monthly installments of Rs 1,207 crore starting November 2025 for LPG under-recoveries, said Director (Finance) Anuj Jain. “The compensation amount will be disbursed in 12 monthly instalments of Rs 1,207 crore, starting November 2025. Accordingly, revenue to the extent of equivalent on a monthly basis will be recognised in the relevant periods,” Jain said during the company’s post-earnings investor call.

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Govt has sanctioned Rs 30,000 crore for LPG under-recoveries

Jain said the government has so far approved Rs 30,000 crore as compensation for LPG under-recoveries. “We are still engaged with the government and will definitely pursue the balance amount,” he said. He noted that LPG remains a regulated product and that the government treats it as a “continuous account” — adjusting for under-recoveries or over-recoveries based on price trends.

“Now that the Saudi CP has come down, we m

ay not have a huge under-recovery in the next few months. In the past also, we have seen some months of over-recovery. The government will take a view on a cumulative basis at the end of FY26,” he said.

IOC continues to buy Russian crude oil while complying with sanctions

Responding to a query on Russian crude oil discounts, Jain said, “Discounts have been consistent over the past five to six months. There is no major change.” He confirmed that IOC continues to buy Russian crude in compliance with international sanctions.

“We are absolutely not going to discontinue as long as we are doing the compliance of the sanctions,” Jain said. “If the entity and the shipping line are not sanctioned and the price cap is complied with, we will continue to buy.” He added that discounts currently remain around USD 2–3 per barrel.

Cost optimisation drive under Project Sprint

On the company’s cost-saving initiative, Project Sprint, Jain said it covers both capital and revenue expenditure. “What we are doing is to optimise wherever there is capex or revenue. It’s a three-year project that started in April,” he said.

While specific figures were not disclosed, he said the target is to reduce costs by 20 percent of the budgeted numbers across major business verticals, including refining, pipelines, marketing, retail, LPG, and aviation.

“As on date, it will be difficult for me to share specific numbers because this is an ongoing year,” Jain said. “By the end of the third quarter, we should be able to provide more clarity.”

Panipat refinery expansion on track

Jain said 90 percent of physical progress has been achieved on the Panipat refinery expansion project, which is expected to be commissioned by June 2026. “The refinery should come on commissioning by June 2026. The basic capacity is 10 MMTPA, and in the first year, we expect about 60 percent throughput,” he said.

On throughput guidance, Jain said IOC’s standalone refinery capacity utilisation generally remains above 100 percent. “For FY26, the standalone throughput should be around 72–73 MMTPA, and for FY27, higher by 4–5 MMTPA,” he said. By FY27, Indian Oil expects to complete its refinery capacity expansion projects.

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