Rs. 30,000 Crore Compensation for OMCs to Offset LPG Losses

On 8th August 2025, the Union Cabinet approved a Rs. 30,000 crore compensation package for three public sector Oil Marketing Companies (OMCs) — Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) — to offset losses from selling domestic LPG at regulated prices.

Key Points

Reason for Compensation: Elevated international LPG prices in 2024-25 were not passed on to domestic consumers, resulting in significant under-recoveries for OMCs.
Consumer Impact: Domestic LPG cylinders are supplied at regulated prices, benefiting millions of households, including those under the Pradhan Mantri Ujjwala Yojana.
Operational Support: The compensation will aid crude and LPG procurement, debt servicing, and capital expenditure, ensuring uninterrupted LPG supply.
Government Commitment: The move reflects the government’s commitment to shielding consumers from global energy price volatility while safeguarding the financial stability of PSU oil companies.
Long-Term Goal: Supports the expansion of access to clean cooking energy and aligns with national objectives for cleaner household fuel adoption.