New Delhi: Indian Oil Corporation (IOC) will receive a compensation of ₹14,486 crore from the Government of India over the next 12 months to cover under-recoveries on liquefied petroleum gas (LPG) sales, the company announced during its post-earnings investor call.
The compensation will be disbursed in 12 equal monthly instalments of ₹1,207 crore each, starting November 2025, said Anuj Jain, Director (Finance), IOC.
“The compensation amount will be disbursed in 12 monthly instalments of ₹1,207 crore starting November 2025. Accordingly, revenue to the extent of equivalent on a monthly basis will be recognised in the relevant periods,” Jain said.
Government Approves ₹30,000 Crore for LPG Under-Recoveries
Jain noted that the Government of India has sanctioned ₹30,000 crore to compensate oil marketing companies (OMCs) for LPG under-recoveries. IOC will continue discussions with the government for the balance amount.
“We are still engaged with the government and will definitely pursue the balance amount,” he said.
He added that LPG remains a regulated product, with the government maintaining a “continuous account” — adjusting for under-recoveries or over-recoveries based on international price movements.
“Now that the Saudi CP (Contract Price) has come down, we may not have a huge under-recovery in the next few months. In the past also, we have seen some months of over-recovery. The government will take a view on a cumulative basis at the end of FY26,” Jain explained.
IOC Continues to Buy Russian Crude Oil in Compliance with Sanctions
Addressing queries on crude oil procurement, Jain confirmed that IOC continues to import Russian crude oil while fully complying with international sanctions and the G7 price cap mechanism.
“Discounts have been consistent over the past five to six months. There is no major change,” Jain said.
“We are absolutely not going to discontinue as long as we are complying with sanctions. If the entity and the shipping line are not sanctioned and the price cap is adhered to, we will continue to buy,” he added.
He said the discounts currently average around USD 2–3 per barrel.
Cost Optimisation Under ‘Project Sprint’
Jain also highlighted IOC’s ongoing cost optimisation initiative, Project Sprint, which covers both capital and revenue expenditure across all major business segments.
“What we are doing is to optimise wherever there is capex or revenue. It’s a three-year project that started in April,” he said.
While specific figures were not disclosed, IOC aims to reduce costs by around 20% of budgeted numbers across verticals including refining, pipelines, marketing, retail, LPG, and aviation.
“It will be difficult to share specific numbers at this stage as this is an ongoing year. By the end of the third quarter, we should be able to provide more clarity,” Jain noted.
Panipat Refinery Expansion on Track
Providing an update on IOC’s ongoing infrastructure projects, Jain said that 90% of the physical work has been completed on the Panipat refinery expansion project, which is expected to be commissioned by June 2026.
“The refinery should come on commissioning by June 2026. The basic capacity is 10 MMTPA, and in the first year, we expect about 60% throughput,” he said.
He added that IOC’s standalone refinery capacity utilisation remains above 100%, with FY26 throughput projected at around 72–73 MMTPA, and an increase of 4–5 MMTPA expected in FY27 once expansion projects are completed.
Looking Ahead
With the upcoming compensation for LPG under-recoveries, continued focus on cost optimisation, and steady progress on refinery expansion projects, IOC remains well-positioned to strengthen its financial stability and operational efficiency. The company continues to align its operations with the government’s energy security objectives while adapting to evolving global market conditions.
About IOCL
Indian Oil Corporation Limited (IOCL) is India’s largest state-controlled oil and gas company, a ‘Maharatna’ Public Sector Undertaking with interests spanning the entire hydrocarbon value chain, including refining, pipelines, and marketing. It operates refineries, a vast pipeline network, and a wide network of retail outlets and service stations across India. The company also has business interests in petrochemicals, exploration, and production.
