Government approves ₹22,000 crore for OMCs to recover LPG losses

In a bid to provide relief to the state-run oil marketing companies, the central government on Wednesday approved the one-time compensation worth ₹22,000 crore to recover from LPG losses. The compensation will be rolled out to Indian Oil Corporation, Hindustan Petroleum Corporation Limited, and Bharat Petroleum Corporation Limited, which provide LPG cylinders at regulated prices.

The prices of household cylinders have remained unchanged, despite a revision in the prices of commercial LPG cylinders. Between the April and June quarter this year, these three OMCs posted a combined loss of ₹18,480 crore. 

Satyendra Prasad, Principal Spokesperson of the central government said, “Cabinet approves ₹ 22,000 crore as one time grant to PSU OMCs for losses in Domestic LPG It will help the PSU OMCs to continue their commitment to the Atmanirbhar Bharat Abhiyaan, ensuring unhindered domestic LPG supplies.”

Meanwhile, Union Minister Anurag Thakur said that between June 2020 and June 2022, international oil prices surged by around 300%. However, the increased cost was not passed on to the consumers. Based on domestic LPG prices witnessed a surge of 72% in the past two years.

“OMCs suffered significant losses between 2020-22 and therefore the government is making a one-time grant to three OMCs,” he added. 

Notably, the petroleum and natural gas ministry has been pushing for compensation of ₹44,000 crore to the OMCs to make up for the LPG losses.

The development comes days after the government slashed the windfall tax on diesel and jet fuel prices and edible oil in the sixth round of revision. While the windfall tax on domestic crude oil has been slashed by 24% to ₹8,000 per tonne from ₹10,500, the tax levy on export the of diesel has been halved to ₹5 per litre, and the levy of ₹5 per litre has been scrapped on the export of jet fuel, with effect from October 2.