The Union Cabinet, chaired by Prime Minister Narendra Modi, on Friday approved Rs 30,000 crore compensation to three public sector Oil Marketing Companies (IOCL, BPCL and HPCL) for the under-recoveries incurred on the sale of domestic LPG.
The distribution of the compensation within the OMCs will be done by the Ministry of Petroleum and Natural Gas. The compensation will be paid in 12 tranches, a Cabinet communique said.
According to the government, this significant step also underlines the commitment to protect consumers from volatility in global energy markets while maintaining the financial health of these PSU OMCs.
Domestic LPG Cylinders are supplied at regulated prices to consumers by the public sector Oil Marketing companies, namely, the IOCL, the BPCL, and the HPCL.
According to a Cabinet note, the international prices of LPG remained at high levels during 2024-25 and continue to remain high.
However, to insulate consumers from fluctuations in international LPG prices, the increase in cost was not passed on to consumers of domestic LPG, which led to significant losses for the three OMCs.
“Despite the losses, the Public Sector Oil Marketing Companies have ensured continuous supplies of domestic LPG in the country at affordable prices,” the Cabinet communique said.
This compensation will allow the OMCs to continue meeting their critical requirements, such as crude and LPG procurement, servicing of debt, and sustaining their capital expenditure, thereby ensuring uninterrupted supply of LPG cylinders to households across the country.
The move reaffirms the objective of ensuring the widespread availability of clean cooking fuel to all consumers of domestic LPG, including those under flagship schemes like PM Ujjwala Yojana, according to the Cabinet statement.
Meanwhile, at least 10.33 crore LPG gas connections have been distributed under the Pradhanmantri Ujjwala Yojna (PMUY) across the country (as of July 1).
The PMUY, launched in May 2016, aims to provide deposit-free LPG connections to 8 crore women from poor households across India, which was achieved by September 2019.
