The Union Cabinet on Wednesday approved a one-time compensation of Rs 22,000 crore for oil marketing companies (OMCs) — IOCL, BPCL and HPCL — on liquefied petroleum gas (LPG) to help them tide over losses as a result of under-recoveries. The LPG prices have not been revised as per the price hikes globally.
The Rs 22,000 crore grant will reflect in supplementary demands for grants.
Briefing reporters on the decision taken by the Union Cabinet, Union Minister Anurag Thakur said that globally, LPG prices have risen as high as 300 per cent. In this comparison, price hikes in India are much lesser. He said the oil marketing companies incurred total expenses of Rs 22,000 crore between June 2020 and June 2022.
“The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, today has approved the proposal of Ministry of Petroleum & Natural Gas to give one time grant amounting to Rs.22,000 crore to three Public Sector Undertaking Oil Marketing Companies (PSU OMCs). The grant will be distributed among Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL),” according to an official statement.
It added that the approval will help the PSU OMCs to continue their commitment to the Atmanirbhar Bharat Abhiyaan, ensuring unhindered domestic LPG supplies and also supporting the procurement of Make in India products.
It added that domestic LPG Cylinders are supplied at regulated prices to consumers by the public sector Oil Marketing companies namely, IOCL, BPCL, HPCL.
“During the period from June 2020 to June 2022, the international prices of LPG increased by around 300 per cent. However, to insulate consumers from fluctuations in international LPG prices, the cost increase was not fully passed on to consumers of domestic LPG,” the statement added.
It also said that accordingly, domestic LPG prices have raised by only 72 per cent during this period. “This has led to significant losses for these OMCs.”
India imports about 50 per cent of its LPG requirement. In the past two years, the import benchmark Saudi contract price has increased over 300 per cent.
On October 1, oil marketing companies cut the 19-kg commercial LPG cylinder price by Rs 25.5. The cylinder now costs Rs 1,859 in Delhi. However, there was no change in domestic LPG prices and it continues to be sold at Rs 1,053 per cylinder in Delhi.
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