## Policy Summary: Losses to Oil Marketing Companies (OMCs) and Government Intervention
This document summarizes the Indian government's response to losses incurred by Public Sector Oil Marketing Companies (OMCs) due to fluctuations in international LPG prices and the government's efforts to stabilize domestic fuel prices.
**Key Issues:**
* **OMC Losses:** OMCs incurred significant losses due to the government's decision to absorb increases in international LPG prices, rather than passing them on to consumers. This was particularly pronounced during periods when the Saudi CP, the international benchmark for LPG pricing, rose substantially (e.g., from \$415/MT to \$712/MT between 2020-21 and 2022-23).
* **LPG Pricing:** The price of LPG in India is linked to international market prices. The government reduced the effective price for Pradhan Mantri Ujjwala Yojana (PMUY) consumers for domestic LPG by 38%, from Rs. 903 in August 2023 to Rs. 553 in July 2025, while the average Saudi CP international benchmark for LPG pricing rose by 51% from US\$ 385/MT in July 2023 to US\$ 582/MT in June 2025.
* **Government Intervention:** To compensate OMCs for these losses, the government provided a one-time compensation of Rs. 22,000 crore in FY 2022-23 and has recently approved an additional compensation of Rs. 30,000 crore.
* **Excise Duty Adjustments:** The Central Government reduced Central Excise duty by Rs. 13/litre on petrol and Rs. 16/litre on diesel in two tranches in November 2021 and May 2022, which was fully passed on to consumers. An increase in excise duty of Rs. 2 per litre each on petrol and diesel in April 2025 was not passed on to consumers.
* **Retail Price Impact:** Petrol and Diesel prices have decreased to Rs. 94.77 and Rs. 87.67 per litre respectively (Delhi prices as of August 1, 2025), from Rs. 110.04 and Rs. 98.42 per litre in November 2021.
* **LPG Imports:** India imports approximately 60% of its domestic LPG consumption.
**Conclusion:** The government has actively intervened to mitigate the impact of volatile international LPG prices on domestic consumers, resulting in losses for OMCs that have been partially offset through direct compensation and adjustments to excise duties. The stated objective is to ensure continuous supplies of domestic LPG at affordable prices.
Key Entities Referenced
Public Sector Oil Marketing Companies: Companies that suffered losses on the gas front and were compensated by the government.
PETROLEUM AND NATURAL GAS: The ministry responsible for matters related to petroleum and natural gas.
SHRI SURESH GOPI: Minister of State in the Ministry of Petroleum and Natural Gas.
LPG: Liquefied petroleum gas, a product whose price fluctuations affected Oil Marketing Companies.
Saudi CP: Saudi Contract Price, an international benchmark for LPG pricing.
Pradhan Mantri Ujjwala Yojana (PMUY): A scheme providing subsidized domestic LPG to consumers.
Central Excise duty: Tax levied by the Central Government on the production of goods like petrol and diesel.
Delhi: The National Capital Territory of Delhi, where petrol and diesel prices are mentioned.
LOK SABHA
UNSTARRED QUESTION NO. 4638
TO BE ANSWERED ON 21 AUGUST, 2025
Losses to OMCs
4638. SHRI SELVAGANAPATHI T.M.:
पेट(cid:332)ोिलयम और (cid:366)ाकृ ितक गैस मं(cid:361)ी
Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:
(a) whether it is a fact that the Public Sector Oil Marketing Companies have suffered a net loss of
Rs. 43,000 crore on the gas front;
(b) if so, the details thereof;
(c) whether it is also a fact that the increase in the excise duty was raised to compensate for the
losses suffered by these companies and if so, the details thereof;
(d) whether an increase in the excise duty on petrol, diesel and LPG would have no impact on
retail prices; and
(e) if so, the details thereof?
ANSWER
पेट(cid:332)ोिलयम और (cid:366)ाकृ ितक गैस मं(cid:361)ालय म(cid:336) रा(cid:475) मं(cid:361)ी
((cid:373)ी सुरेश गोपी)
MINISTER OF STATE IN THE MINISTRY OF PETROLEUM AND NATURAL GAS
(SHRI SURESH GOPI)
(a) to (e): India imports about 60% of the domestic LPG consumed. Price of LPG in the
country is linked to its price in the international market. While the average Saudi CP
(international benchmark for LPG pricing) rose by 51% (from US$ 385/MT in July 2023 to US$
582/MT in June 2025), the effective price for Pradhan Mantri Ujjwala Yojana (PMUY)
consumers for domestic LPG was reduced by 38% (from Rs. 903 in August 2023 to Rs. 553 in
July 2025).
During the period 2020-21 to 2022-23, Saudi CP (international benchmark for LPG pricing)
went up from $415 per MT to $712 per MT. However, the increase in international prices was
not fully passed on retail prices, due to which the Oil Marketing Companies (OMCs) suffered
significant losses. To compensate the OMCs for these losses, Government paid a one-time
compensation of Rs. 22,000 crore to OMCs in FY 2022-23.The international prices of LPG again went up 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 these losses, the Public Sector Oil Marketing Companies have ensured
continuous supplies of domestic LPG in the country at affordable prices. To compensate the
OMCs for these losses, Government has recently approved a compensation of Rs. 30,000 crore
to the OMCs.
Petrol and Diesel prices have come down to Rs. 94.77 and Rs. 87.67 per litre respectively (1st
August 2025, Delhi prices) from Rs. 110.04 and Rs. 98.42 per litre in November 2021 as a result
of various steps taken by Government and PSU OMCs.
Central Excise duty was reduced by the Central Government by a total of Rs. 13/litre and Rs.
16/litre on petrol and diesel respectively in two tranches in November 2021 and May 2022,
which was fully passed on to consumers. Some State Governments also reduced state VAT rates
to provide relief to citizens. On the other hand, excise duty on Petrol and Diesel was increased by
Rs. 2 per litre each in April 2025 but this increase was not passed on to consumers.
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