Rs 22,000-crore grant to oil PSUs to compensate LPG losses
New Delhi, Oct 12
Aiming to compensate for under-recovery made by the public sector oil marketing companies (OMCs) on account of the sale of LPG, the government today sanctioned a one-time grant of Rs 22,000 crore to them.
Briefing media about the decisions of the Union cabinet, which was chaired by Prime Minister Narendra Modi, Information & Broadcasting Minister Anurag Thakur said, the approval has been made to give the one-time grant of Rs 22,000 crore to three oil marketing companies — Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL).
The grant will be for covering the losses the companies incurred on selling LPG below the cost to consumers from June 2020 to June 2022, the minister said, adding these are the three companies which sell domestic LPG at government-regulated prices to consumers.
Between June 2020 and June 2022, the international prices of LPG soared by around 300%, Thakur said. But to insulate consumers from fluctuations in international LPG prices, the appreciation in the cost was not fully passed on to consumers of domestic LPG, he added.
Accordingly, domestic LPG prices have risen by only 72% during this period, he said adding this led to significant losses for the three firms and the health of their balance sheet was also a matter of concern for the government.
Covering under-recovery
- The grant will be for covering the losses they incurred on selling LPG below cost to consumers from June 2020 to June 2022
- The three firms — IndianOil, Bharat Petroleum and Hindustan Petroleum — sell domestic LPG at government-regulated prices to consumers
- Between June 2020 and June 2022, the international prices of LPG soared by around 300%. However, the cost increase was not fully passed on to consumers
