Centre govt likely to compensate oil retailers for LPG losses

The government is likely to give a subsidy of Rs 30,000-35,000 crore to state-run oil companies – Indian Oil Corporation (IOC), Bharat Petroleum (BPCL), and Hindustan Petroleum (HPCL) – to compensate for losses incurred from selling LPG at below cost over the past 15 months, according to a senior official.

The Finance Ministry is working out the exact under-recovery or loss incurred and the mechanism to compensate it, he said.

In the Union Budget for 2025-26 fiscal (April 2025 to March 2026) presented on February



1, the government has made no provision to compensate for the under-recoveries. However, in April, the government raised excise duty on petrol and diesel to garner additional Rs 32,000 crore in revenues.

This additional revenue is what the finance ministry may use to compensate for LPG under-recoveries. “Oil marketing companies (OMCs) are part of the Government family. 

Compensation will happen. We are evaluating how much is under recovery and looking at the modalities for compensating them,” the official said.