Explained: Rs 30,000 Cr Govt's Lifeline to OMCs and Ujjwala Beneficiary: What It Means and Why It Matters

The Union Cabinet led by Prime Minister Narendra Modi has recently approved the compensation amounting to Rs 30,000 crore to the three Public Sector Oil Marketing Companies (OMCs) for the under-recoveries incurred on sale of domestic LPG.

What Does This Mean?

This means that the distribution of the compensation within the OMCs will be done by the Ministry of Petroleum and Natural Gas. The compensation will be paid in twelve tranches.

OMCs like Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) are supplying domestic LPG cylinders at regulated prices to consumers.

The international prices of LPG remained at high levels during 2024-25 and continue to remain high. However, to insulate consumers from fluctuations in international LPG prices, the increase in cost was not passed on to consumers of domestic LPG which led to significant losses for the three OMCs. Despite the losses, the Public Sector Oil Marketing Companies have ensured continuous supplies of domestic LPG in the country at affordable prices.

Why Does This Matter?

This matters because this compensation will allow the OMCs to continue meeting their critical requirements such as crude and LPG procurement, servicing of debt, and sustaining their capital expenditure, thereby ensuring uninterrupted supply of LPG cylinders to households across the country.

Additionally, this step also underlines the government’s commitment to protect consumers from volatility in global energy markets while maintaining the financial health of these PSU OMCs.

It further reaffirms the objective of ensuring the widespread availability of clean cooking fuel to all consumers of domestic LPG, including those under flagship schemes like PM Ujjwala Yojana.

Also Read: US Trade Adviser Justifies Trump Tariff Offensive, Calls India’s Russian Oil Purchases ‘National Security Issue’