The Union Cabinet, led by Prime Minister Narendra Modi, has approved a financial support package of Rs. 30,000 crore for the three state-run Oil Marketing Companies (OMCs) — Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL). This compensation is aimed at covering the losses these companies incurred from selling domestic LPG at subsidized rates.
The Ministry of Petroleum and Natural Gas will oversee the allocation of funds among the three companies. The compensation will be disbursed in twelve instalments.
Public sector OMCs supply domestic LPG cylinders at regulated prices. Over the financial year 2024–25, international LPG prices remained elevated and continue to stay high. To shield consumers from these fluctuations, the government chose not to pass on the rising costs, resulting in substantial under-recoveries for the oil companies. Despite the financial strain, the OMCs have continued to supply LPG cylinders across the country without disruption and at prices affordable to the public.
The approved compensation is expected to help these companies manage essential operations, including procurement of crude oil and LPG, debt servicing, and capital expenditure. This support will play a critical role in maintaining a stable and uninterrupted supply of domestic LPG to households.
This decision reflects the government’s ongoing commitment to protect consumers from global energy price volatility, while also ensuring the financial stability of public sector OMCs. It further underscores the goal of making clean cooking fuel widely available, especially under welfare schemes such as the Pradhan Mantri Ujjwala Yojana.
