New Delhi: The Union Cabinet, chaired by Prime Minister Narendra Modi, has cleared a ₹30,000 crore compensation package for three public sector Oil Marketing Companies (OMCs)—Indian Oil Corporation Ltd. (IOCL), Bharat Petroleum Corporation Ltd. (BPCL), and Hindustan Petroleum Corporation Ltd. (HPCL). The financial support will help offset the under-recoveries incurred on the sale of domestic LPG.
The compensation will be disbursed in twelve tranches, with the Ministry of Petroleum and Natural Gas overseeing its distribution among the three OMCs.
High International Prices Absorbed by OMCs
In FY 2024–25, global LPG prices remained elevated. However, the price hike was not passed on to Indian consumers of domestic LPG cylinders. To shield households from this volatility, public sector OMCs continued supplying LPG at regulated, affordable rates. This led to heavy losses across all three companies.
Despite mounting under-recoveries, IOCL, BPCL, and HPCL maintained uninterrupted LPG supply across the country.
Financial Relief to Sustain Operations and Investments
The ₹30,000 crore infusion is expected to support critical OMC functions, including crude and LPG procurement, debt servicing, and capital expenditure. It will also help ensure consistent domestic LPG availability to Indian households.
The Cabinet decision highlights the government’s dual commitment: stabilizing energy prices for consumers while preserving the financial health of public sector OMCs.
This move also reaffirms the Centre’s long-term vision of ensuring affordable, clean cooking fuel access—especially under schemes like the Pradhan Mantri Ujjwala Yojana.
About the OMCs
IOCL, BPCL, and HPCL are India’s leading public sector Oil Marketing Companies. Under the Ministry of Petroleum and Natural Gas, they play a key role in energy security by ensuring the widespread supply of petroleum products, including subsidized domestic LPG, to consumers nationwide.
