In a decisive move to safeguard household budgets and maintain energy security, the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved ₹30,000 crore in compensation for public sector Oil Marketing Companies (OMCs)—Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL). The financial assistance will cover the under-recoveries incurred on domestic LPG sales during 2024–25, when international LPG prices soared to unprecedented levels.
The compensation, to be administered by the Ministry of Petroleum and Natural Gas, will be released in 12 equal tranches over the designated period. This structured disbursement is aimed at ensuring the financial stability of OMCs while enabling them to continue supplying LPG cylinders to Indian households at regulated and affordable prices.
Over the past year, the global energy market has witnessed extreme volatility, with LPG prices driven up by geopolitical tensions, supply chain disruptions, and higher transportation costs. In most countries, such price spikes are passed on to consumers, but in India, the government chose to shield citizens—especially low- and middle-income households—from the brunt of these increases.
As a result, OMCs sold LPG at prices significantly lower than the landed cost, leading to substantial under-recoveries. Despite these financial setbacks, IOCL, BPCL, and HPCL maintained uninterrupted supply across the nation, ensuring that households, particularly those dependent on LPG for daily cooking, were not impacted by supply shortages.
This latest decision reflects the government’s dual commitment—protecting consumers from international price shocks while supporting public sector enterprises that play a critical role in energy distribution. Officials noted that without this compensation, the financial strain on OMCs could have hindered their ability to maintain supply infrastructure, invest in modernization, and meet future demand growth.
The initiative also aligns with broader national goals under the Pradhan Mantri Ujjwala Yojana (PMUY), which has brought clean cooking fuel to millions of rural and low-income households. Affordable pricing is essential to ensuring sustained adoption of LPG, reducing dependence on polluting traditional fuels such as firewood and kerosene, and improving health outcomes, especially for women and children.
In addition to stabilizing LPG supply, the government views this move as a confidence-building measure for the energy sector. By guaranteeing timely compensation, it reassures stakeholders that India’s public sector OMCs will remain financially resilient and operationally efficient, even in times of global market turbulence.
Looking ahead, the government is also exploring strategies to reduce exposure to international price volatility. This includes strengthening domestic LPG production capacity, enhancing storage facilities, diversifying import sources, and encouraging the use of alternative clean cooking technologies where feasible.
With this decision, the Union Cabinet has once again underscored its commitment to energy accessibility, affordability, and reliability—ensuring that every household in India continues to have access to clean cooking fuel without facing the economic burden of unpredictable global price movements.
