The government will provide Rs 35,000 crore to public sector Indian Oil Corporation Limited (IOC), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) to compensate for the losses incurred on selling fuel in this financial year (FY 2024-25). Can give subsidy of Rs. According to PTI news,
The three oil marketing companies have kept the price of domestic LPG unchanged at Rs 14.803 per 2 kg cylinder from March 2024, despite the increase in the cost of raw materials.
This led to under-recovery on LPG sales and resulted in a sharp decline in their earnings in April-September (H1 of the current financial year 2024-25).
Subsidy provision likely to be made in budget
According to the news, the total under-recovery on LPG sales for the industry in the current financial year is estimated to be around Rs 40,500 crore. Still, the government can give a total of Rs 35,000 crore in two financial years. Sources said IOC, BPCL and HPCL are likely to get Rs 10,000 crore during the current financial year 2024-25 and the remaining Rs 25,000 crore in the next financial year. The provision for the subsidy is likely to be made in the Union Budget 2025-26, which Finance Minister Nirmala Sitharaman will present on February 1.
Under-recovery of Rs 240
Sources said there is an under-recovery (or loss) of about Rs 240 on a 14.2 kg cylinder, which state-owned fuel retailers sell to domestic households at the current price of Rs 803. Domestic LPG prices are regulated by the government to protect households from high market rates. The Government compensates these losses to IOC, BPCL and HPCL from time to time. The trio were earlier given compensation of Rs 22,000 crore for the 2021-22 and 2022-23 financial years. This was against under-recovery of Rs 28,249 crore.
Domestic LPG prices unchanged from March 9, 2024
According to the report, out of the estimated under-recovery of Rs 40,500 crore for the current financial year, IOC’s share is likely to be Rs 19,550 crore, HPCL’s Rs 10,570 crore and BPCL’s share is likely to be Rs 10,400 crore. Domestic LPG prices have remained unchanged since March 9, 2024, when it was cut by Rs 100 on a 14.2 kg cylinder just before the general elections were announced. International LPG prices remain moderately high in 2024, even during the summer, leading to under-recovery, sources said. Prices are expected to remain high during the winter months.
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