Union Cabinet Clears ₹30,000 Crore LPG Compensation to Support OMCs

The Union Cabinet has approved a ₹30,000 crore compensation for public sector oil marketing companies (OMCs) to cover their losses on selling cooking gas cylinders below the market price. Reportedly, this aims to offset the financial burden on OMCs, including Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), and Hindustan Petroleum Corporation (HPCL).

Cooking Gas Subsidy for Poor Households

The Cabinet also extended the Pradhan Mantri Ujjwala Yojana (PMUY) subsidy for the year 2025-26. Under this plan, eligible households will continue to receive a subsidy of ₹300 per 14.2 kg LPG cylinder for up to 9 refills annually. The total expenditure for this subsidy has been set at ₹12,000 crore.

OMCs' Losses Due to High International LPG Prices

As per the news reports, during the fiscal year 2024-25, international LPG prices remained high, but the government decided not to pass on the cost increase to consumers. This led to significant losses for OMCs, which incurred a total under-recovery of over ₹41,000 crore. Despite these challenges, the companies continued to supply LPG at affordable prices.

Compensation, Distribution and Financial Support

The ₹30,000 crore compensation will be distributed in 12 tranches by the Ministry of Petroleum and Natural Gas. This financial support is expected to help OMCs cover critical expenses like crude oil and LPG procurement, servicing debt, and sustaining capital expenditure. It will also ensure that LPG cylinders remain available to consumers across the country.

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Conclusion

The approval of this compensation package demonstrates the government’s plans to support both consumers and OMCs. By providing this financial relief, the government will be able to maintain a stable supply of affordable LPG while helping OMCs recover from the financial pressures caused by high international fuel prices.

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