Cabinet approves Rs22,000-cr compensation to OMCs for losses in domestic LPG
13 Oct 2022
The union cabinet, chaired by Prime Minister Narendra Modi on Wenesday approved the proposal of the ministry of petroleum and natural gas to give one time grant amounting to Rs22,000 crore to three public sector oil marketing companies (OMCs). The grant will be distributed among Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL).
The approval will help the PSU OMCs to ensure unhindered domestic LPG supplies and also support the procurement of Make in India products.
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. Accordingly, domestic LPG prices have increased by only 72 per cent during this period. This has led to significant losses for these OMCs.
Despite these losses, the three PSU OMCs have ensured continuous supplies of this essential cooking fuel in the country.