Did the Cabinet Approve Rs 30,000 Crore for OMCs' LPG Losses?
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Synopsis
The Cabinet's approval of Rs 30,000 crore to OMCs for LPG losses is a crucial step in safeguarding consumers from global price volatility while ensuring consistent supply of affordable LPG. This initiative supports millions of households across India.
Key Takeaways
- Compensation of Rs 30,000 crore approved for OMCs.
- Support aimed at protecting consumers from price fluctuations.
- Compensation distributed in 12 tranches.
- Over 10.33 crore LPG connections provided under PMUY.
- Maintaining the financial health of public sector OMCs.
Cabinet approves Rs 30,000 crore as compensation to public sector OMCs for losses incurred in the sale of domestic LPG.
New Delhi, Aug 8 (NationPress) - The Union Cabinet, led by Prime Minister Narendra Modi, has sanctioned a compensation package of Rs 30,000 crore for three Public Sector Oil Marketing Companies (IOCL, BPCL, and HPCL) due to the under-recoveries faced on domestic LPG sales.
The allocation of this compensation will be managed by the Ministry of Petroleum and Natural Gas and will be disbursed in 12 installments, as stated by the Cabinet.
This vital decision highlights the government's dedication to shielding consumers from the fluctuations of global energy markets while ensuring the financial stability of these PSU OMCs.
Public sector Oil Marketing Companies, including IOCL, BPCL, and HPCL, supply domestic LPG cylinders at regulated prices to consumers.
A Cabinet note indicated that international LPG prices have remained elevated throughout 2024-25.
In an effort to protect consumers from the volatility of international LPG prices, the cost increase was not transferred to domestic LPG consumers, resulting in significant financial losses for the three OMCs.
“Despite facing losses, the Public Sector Oil Marketing Companies have guaranteed a consistent supply of domestic LPG at affordable rates,” the Cabinet note remarked.
This compensation will enable the OMCs to fulfill crucial needs such as crude and LPG procurement, debt servicing, and maintaining their capital expenditures, thus ensuring an uninterrupted supply of LPG cylinders to households nationwide.
The initiative reinforces the commitment to ensure the widespread availability of clean cooking fuel for all domestic LPG consumers, including those benefitting from flagship schemes like PM Ujjwala Yojana, as per the Cabinet statement.
As of July 1, over 10.33 crore LPG gas connections have been allocated under the Pradhanmantri Ujjwala Yojna (PMUY) across the nation.
Launched in May 2016, the PMUY aims to provide deposit-free LPG connections to 8 crore women from economically disadvantaged households, a target achieved by September 2019.
Point of View
NationPress
07/10/2025
Frequently Asked Questions
What is the purpose of the Rs 30,000 crore compensation?
The compensation aims to cover the losses incurred by public sector OMCs due to the under-recovery on domestic LPG sales, ensuring they can maintain affordable prices for consumers.
How will the compensation be distributed?
The Ministry of Petroleum and Natural Gas will manage the distribution of the compensation among the OMCs, which will be paid in 12 tranches.
Why are OMCs facing losses?
OMCs are facing losses because they have not transferred the increased costs of international LPG prices to consumers, to protect them from price volatility.
How many LPG connections have been provided under PMUY?
As of July 1, over 10.33 crore LPG gas connections have been distributed under the Pradhanmantri Ujjwala Yojna across India.
What is the PM Ujjwala Yojana?
The PM Ujjwala Yojana is a government initiative that aims to provide deposit-free LPG connections to 8 crore women from impoverished households.
