Cabinet approves Rs 30,000-cr compensation to PSU oil firms for domestic LPG losses

The Union Cabinet, chaired by Prime Minister Narendra Modi, on Friday approved compensation amounting to Rs 30,000 crore to three public sector oil marketing companies — IOCL, BPCL, and HPCL — for the under-recoveries incurred on the sale of domestic LPG.

The Ministry of Petroleum and Natural Gas will distribute the compensation among the oil marketing companies (OMCs) in 12 tranches.

Advertisement

Public sector oil marketing companies — IOCL, BPCL, and HPCL — supply domestic LPG cylinders to consumers at regulated prices.

International LPG prices remained elevated during 2024-25 and continue to stay high. However, to insulate consumers from these fluctuations, the increase in cost was not passed on to domestic LPG consumers, resulting in significant losses for the three OMCs. Despite these losses, the public sector oil marketing companies have ensured an uninterrupted supply of domestic LPG across the country at affordable prices.

This compensation will help OMCs meet critical requirements such as crude and LPG procurement, debt servicing, and capital expenditure, thereby ensuring an uninterrupted supply of LPG cylinders to households across the country.

This step also underlines the government’s commitment to protecting consumers from volatility in global energy markets while safeguarding the financial health of these PSU OMCs. It also reaffirms the objective of ensuring widespread availability of clean cooking fuel for all domestic LPG consumers, including beneficiaries of flagship schemes like the PM Ujjwala Yojana.