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Informist, Friday, Aug. 8, 2025

NEW DELHI – The Cabinet Committee on Economic Affairs Friday decided to compensate state-run oil marketing companies INR 300 billion for under-recoveries in 2024-25 (Apr-Jun). The compensation is INR 110 billion lower than the under-recoveries of INR 410 billion incurred by the state-owned oil companies for subsidised sale of liquified petroleum gas. 

The Cabinet committee approved the compensation to the three public sector oil marketing companies – Indian Oil Corp. Ltd., Bharat Petroleum Corp. Ltd. and Hindustan Petroleum Corp. Ltd. – for the under-recoveries incurred on the sale of domestic liquefied petroleum gas. The compensation will be given to the three companies by the Ministry of Petroleum and Natural Gas in twelve tranches, an official release said. 

Petroleum and Natural Gas Secretary Pankaj Jain had told Informist in April that the government would compensate the companies from the collections made on the increase of INR 2 per litre in excise duty on petrol and diesel in April. The government expects to collect around INR 320 billion from the duty increase, Jain had said.

International prices of LPG remained at high levels during 2024-25 (Apr-Mar) and continue to remain high. In order 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 oil marketing companies, the release said. In a report, CareEdge had said that under-recoveries were to the tune of INR 220 per 14.2 kg cylinder. 

The last such compensation given by the government was in October 2022, when the Centre announced a payment of INR 220 billion for the state-run oil companies' cumulative loss of INR 280 billion.

"This compensation will allow the OMCs (oil marketing companies) 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," the release said.  End

Reported by Sagar Sen and Priyasmita Dutta

Edited by Saji George Titus

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