New Delhi: The Union Cabinet on Thursday approved ₹30,000 crore in compensation to three public sector oil marketing companies — Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) — to offset under-recoveries incurred on the sale of domestic LPG.
The Ministry of Petroleum and Natural Gas will allocate the amount among the OMCs, with disbursements to be made in 12 tranches.
Domestic LPG cylinders are supplied at regulated prices by the three companies. The international LPG prices stayed elevated during 2024-25 and continue to remain high. The government did not pass on the increase in cost to consumers, resulting in significant losses for the OMCs.
Despite the losses, IOCL, BPCL and HPCL maintained uninterrupted supplies of domestic LPG across the country at regulated prices.
According to the government, the approved compensation will enable the OMCs to meet critical expenses such as crude oil and LPG procurement, debt servicing and sustaining capital expenditure, thereby ensuring continued availability of LPG cylinders to households.
It added that the decision supports the aim of ensuring access to clean cooking fuel for all domestic LPG consumers, including beneficiaries under the Pradhan Mantri Ujjwala Yojana, while maintaining the financial stability of the PSU oil companies and protecting consumers from volatility in global energy markets.
