**Policy Summary:**
On August 8, 2025, the Union Cabinet, chaired by the Prime Minister, approved a compensation package of Rs. 30,000 crore for three Public Sector Oil Marketing Companies (OMCs): IOCL, BPCL, and HPCL. This compensation is intended to address the under-recoveries incurred by these companies on the sale of domestic LPG during the fiscal year 2024-25, a period characterized by high international LPG prices. To protect domestic consumers from volatile global energy markets, the OMCs absorbed the increased costs without fully passing them on to consumers, resulting in financial losses for the companies. The Ministry of Petroleum and Natural Gas will oversee the distribution of the compensation among the three OMCs, which will be disbursed in twelve tranches. This financial support will enable the OMCs to maintain critical operations, including the procurement of crude oil and LPG, debt servicing, and capital expenditure, ensuring a continuous and affordable supply of LPG to households nationwide. The policy reaffirms the government's commitment to safeguarding consumers from global energy market volatility, maintaining the financial stability of Public Sector OMCs, and ensuring the widespread availability of clean cooking fuel, including to beneficiaries of schemes such as PM Ujjwala Yojana. Release ID: 2154118.
Key Entities Referenced
Public Sector Oil Marketing Companies: Refers to Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL), the three state-owned oil marketing companies in India.
IOCL: Indian Oil Corporation Limited, a Public Sector Oil Marketing Company.
BPCL: Bharat Petroleum Corporation Limited, a Public Sector Oil Marketing Company.
HPCL: Hindustan Petroleum Corporation Limited, a Public Sector Oil Marketing Company.
Ministry of Petroleum and Natural Gas: The Indian government ministry responsible for the exploration, production, refining, distribution, marketing, and pricing of petroleum, natural gas, and petrochemicals.
Domestic LPG: Liquefied petroleum gas used for domestic cooking purposes.
PM Ujjwala Yojana: A flagship scheme of the Government of India aimed at providing clean cooking fuel (LPG) to poor households.
Delhi: National Capital Territory of Delhi
Cabinet
Cabinet approves Rs 30,000 crore as compensation
to Public Sector Oil Marketing Companies for losses
in Domestic LPG
Posted On: 08 AUG 2025 4:02PM by PIB Delhi
The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, has approved compensation
amounting to Rs.30,000 crore to the three Public Sector Oil Marketing Companies (IOCL, BPCL & HPCL)
for the under- recoveries incurred on sale of domestic LPG. The distribution of the compensation within the
OMCs will be done by the Ministry of Petroleum and Natural Gas. The compensation will be paid in twelve
tranches.
Domestic LPG Cylinders are supplied at regulated prices to consumers by the public sector Oil
Marketing companies namely, IOCL, BPCL, HPCL.
The international prices of LPG remained at high levels during 2024-25 and continue to remain
high. However, to insulate consumers from fluctuations in international LPG prices, the increase in
cost was not passed on to consumers of domestic LPG which led to significant losses for the three
OMCs. Despite the losses, the Public Sector Oil Marketing Companies have ensured continuous
supplies of domestic LPG in the country at affordable prices.
This compensation will allow the OMCs to continue meeting their critical requirements such as
crude and LPG procurement, servicing of debt, and sustaining their capital expenditure, thereby
ensuring uninterrupted supply of LPG cylinders to households across the country.
This step also underlines the Government’s commitment to protect consumers from volatility in
global energy markets while maintaining the nancial health of these PSU OMCs. It also rearms the
objective of ensuring the widespread availability of clean cooking fuel to all consumers of domestic
LPG, including those under flagship schemes like PM Ujjwala Yojana.
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MJPS/BM
(Release ID: 2154118)