The Union Cupboard on Friday accepted a budgetary assist of Rs 30,000 for public sector oil advertising and marketing corporations (OMCs) to cowl their losses on sale of cooking fuel cylinders under market worth in shopper curiosity.
The compensation to offer aid to the OMCs—Indian Oil Company (IOC), Bharat Petroleum Company (BPCL), and Hindustan Petroleum Company (HPCL)—was within the works for just a few months. It was anticipated to be from the extra mop-up from the hike in excise obligation on petrol and diesel that took impact in April.
In July, The Indian Specific has reported that the proposal was anticipated to be thought-about quickly by the Union Cupboard.
It’s estimated that the three OMCs incurred a cumulative lack of over Rs 41,000 crore on liquefied petroleum fuel (LPG, or cooking fuel) gross sales in 2024-25 (FY25) as they’ve been promoting the family cooking gasoline method under worldwide costs. In April, Petroleum Secretary Pankaj Jain had stated that he was hopeful that the OMCs might be compensated for his or her amassed losses on LPG gross sales over a 12 months or so by means of an applicable mechanism by the federal government. Sources indicated that the Petroleum Ministry had sought assist from the Finance Ministry to cowl these losses. Assist was additionally sought earlier than the Finances for FY26, however no aid was offered on the time.
Annual petrol and diesel gross sales within the nation stand at round 16,000 crore litres, which implies that the Rs 2-per-litre improve in excise obligation introduced in April ought to result in a further income of round Rs 32,000 crore for the federal government on an annualised foundation. The Petroleum Ministry and the OMCs anticipated this incremental income to movement again into the OMCs as authorities assist to cowl losses on LPG gross sales. Notably, in October 2022, the federal government had accepted a one-time grant of Rs 22,000 crore for OMCs to partially cowl their amassed losses of round Rs 28,000 crore on the time from promoting LPG at a loss in shopper curiosity.
In line with the Petroleum Ministry’s estimates, the common Saudi CP—the worldwide benchmark for LPG pricing—had shot as much as to $629 per tonne in February 2025 from $385 in July 2023. This could have ideally translated into cooking fuel being retailed at Rs 1,028.50 per 14.2-kg cylinder in Delhi. However on the time, it was being bought at Rs 803. As India will depend on imports to fulfill a bulk of its LPG demand, cooking fuel costs are linked to worldwide LPG worth benchmarks. In April, together with hike in excise obligation on petrol and diesel, LPG costs had been hiked by Rs 50 per cylinder, to offer some aid to the OMCs on cooking fuel gross sales.
Other than high oil ministry officers, IOC had additionally expressed hope that the extra mop-up from gasoline excise obligation hike may assist cowl the OMCs’ under-recovery on home LPG gross sales.
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“The #ExciseDuty improve of Rs. 2 per litre on #petrol and #diesel by Central Authorities is not going to be handed on to the shoppers. On one hand, this may insulate the shoppers from the value hike whereas however, the collected quantity could also be utilised in the direction of under-recovery of #LPG, offering aid to Oil Advertising Corporations,” IOC had posted on social media platform X on April 7.
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