The government has increased the excise duty on petrol and diesel by ₹2/litre and raised domestic LPG cylinder prices by ₹50 while keeping retail fuel prices unchanged. This move aims to help Oil Marketing Companies (OMCs) recover from a cumulative loss of ₹41,338 crore on LPG in FY 2024-25.
The ₹2/litre excise hike will be absorbed by OMCs, with the revenue going to the Consolidated Fund of India. The government may later use this fund to compensate the OMCs for their LPG-related losses. However, the LPG price hike will only cover future under-recoveries, not past losses.
Despite absorbing the excise hike, OMCs are expected to maintain healthy margins due to a recent drop in crude oil prices to $63–64 per barrel. The excise hike could generate around ₹32,000 crore annually, potentially offsetting the losses incurred by the PSUs.
