Cabinet Approves ₹30,000 Crore Compensation to OMCs for Domestic LPG Losses

New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, has approved a compensation package of ₹30,000 crore for three public sector Oil Marketing Companies (OMCs) — Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) — to cover under-recoveries incurred on the sale of domestic LPG. The Ministry of Petroleum and Natural Gas will oversee the distribution of the amount among the OMCs, which will be paid in 12 tranches.

Domestic LPG cylinders are supplied at regulated prices by these state-run companies. In 2024-25, international LPG prices remained elevated and continue to be high. To shield households from price volatility, the government did not pass on the increased costs to domestic consumers, leading to significant financial losses for the OMCs. Despite these challenges, the companies ensured uninterrupted supply of LPG cylinders across the country at affordable rates.

Officials said the approved compensation will enable the OMCs to meet critical expenses, including crude oil and LPG procurement, debt servicing, and sustaining capital investments. This, in turn, will help maintain stable and reliable LPG supply to households, including beneficiaries under flagship schemes such as the Pradhan Mantri Ujjwala Yojana.

The move reflects the government’s dual focus on protecting consumers from global energy market fluctuations and maintaining the financial stability of public sector fuel retailers, thereby supporting the long-term goal of universal access to clean cooking fuel.