The Union Cabinet, chaired by Prime Minister Narendra Modi, on Friday approved a compensation package of ₹30,000 crore 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 incurred from selling domestic LPG at regulated prices.
The Ministry of Petroleum and Natural Gas will oversee the distribution of the compensation among the OMCs, which will be disbursed in 12 instalments.
Despite international LPG prices remaining elevated through 2024-25, the government ensured that these costs were not passed on to domestic consumers, resulting in significant under-recoveries for the OMCs. Domestic LPG cylinders are supplied to households at regulated rates, with millions of beneficiaries under flagship schemes such as the Pradhan Mantri Ujjwala Yojana.
“Even amid heavy losses, public sector OMCs maintained uninterrupted domestic LPG supplies at affordable prices,” the government said, noting that the move reflects its commitment to shielding consumers from global energy market volatility.
Officials said the compensation will help the companies meet critical operational needs such as crude and LPG procurement, debt servicing, and capital expenditure, thereby ensuring the continued availability of clean cooking fuel to households across the country.
The decision, the government added, underscores its dual focus on consumer welfare and the financial health of PSU oil companies, while also supporting the long-term goal of expanding access to clean cooking energy.