The central authorities is planning to hunt Cupboard approval for a compensation bundle value Rs 32,000–35,000 crore to reimburse oil advertising firms (OMCs) for losses from promoting subsidised LPG within the present monetary yr, in accordance with senior authorities officers.
This monetary assist is meant to alleviate the burden on Indian Oil Company (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL), that are estimated to have incurred under-recoveries of roughly Rs 30,000 crore on LPG gross sales between April and December 2024. Retail costs remained largely unchanged regardless of a worldwide rise in LPG charges, including strain on the state-run companies.
The compensation proposal is in its ultimate evaluation stage and will likely be delivered to the Cupboard by the Finance Ministry. It follows the same transfer in 2022 when the federal government paid Rs 22,000 crore for previous under-recoveries. The present losses for FY25 are estimated to be round Rs 40,500 crore.
The funds are more likely to come from extra income generated by the excise responsibility hike on petrol and diesel earlier this yr, which will likely be routed via the Consolidated Fund of India. To date, about Rs 32,000 crore in additional collections have been generated from the responsibility hike.
Whereas the compensation is meant to offset LPG-related losses, OMCs may have the pliability to utilise the funds for capital expenditures or operational upgrades. Officers say this strategy helps assist firms with out including to the official subsidy invoice or breaching the federal government’s expenditure targets.
Clearances from the Expenditure Finance Committee are already in place, and the Cupboard resolution is anticipated quickly.
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