Cabinet Approves Rs 30,000-cr Subsidy to Three Public Sector Oil Companies
The ministry of petroleum and natural gas will distribute the compensation to oil marketing companies (OMCs) in 12 tranches
NEW DELHI: The Union Cabinet on Friday approved a subsidy of ₹30,000 crore to the three public sector oil marketing companies — Indian Oil Corporation (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) — to compensate for losses incurred from selling LPG at below cost over 15 months. The Union Cabinet also approved a subsidy of ₹12,000 crore under the Pradhan Mantri Ujjwala Yojana (PMUY) for 2025-26, benefitting 10.33 crore households.
In a statement, the government said that domestic LPG cylinders are supplied at regulated prices to consumers by the public sector oil marketing companies (OMCs). The international prices of LPG were at high levels during 2024-25 and continue to remain high.
“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,” the statement said, adding that despite the losses, the public sector oil marketing companies have ensured continuous supplies of domestic LPG in the country at affordable prices.
The ministry of petroleum and natural gas will distribute the compensation to oil marketing companies (OMCs) in 12 tranches. As per the official statement, 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.
“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 also 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,” the government said.
Union minister Ashwini Vaishnaw said that the Union Cabinet, chaired by Prime Minister Narendra Modi, has approved the targeted subsidy of `300 per 14.2 kg cylinder for up to nine refills per year (and proportionately pro-rated for a five kg cylinder) to the beneficiaries of PMUY during Financial Year 2025-26 at an expenditure of `12,000 crores, benefitting 10.33 crore households.
The PMUY was launched in May 2016 to provide free LPG connections to adult women from poor households across the country. As of July 1, there were about 10.33 crore PMUY connections in India.
On Friday, the Union Cabinet also approved four new components under the existing Central sector scheme of special development packages (SDPs) for Assam and Tripura with a total outlay of `4,250 crore.
Vaishnaw said that the overall outlay of the proposed four new components will be `7,250 crore, out of which `4,250 crore will be provided under the existing Central sector scheme of SDPs for Assam (`4,000 crore) and Tripura (`250 crore). The remaining `3,000 crore will be contributed by the Assam government from their resources.
Out of `4,250 crore, an outlay of `4,000 crores for a period of five years from Financial Year 2025-26 to 2029-30 is for three components of Assam, and an outlay of `250 crores for a period of four years from Financial Year 2025-26 to 2028-29 is for one component of Tripura as per the memorandum of settlements signed between the Union Government and the governments of Assam and Tripura with respective ethnic groups of the concerned states.
