Govt plans Rs 35,000 cr LPG subsidy to IOC, BPCL & HPCL

New Delhi: In a move to address mounting financial pressures on state-owned fuel retailers, the government is likely to provide a subsidy of Rs 35,000 crore to Indian Oil Corporation Ltd (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), sources revealed. The subsidy aims to compensate for losses incurred on the sale of domestic liquefied petroleum gas (LPG) at controlled prices during the current fiscal year.

The three companies have maintained the price of domestic LPG at Rs 803 per 14.2-kg cylinder since March 2024, despite a rise in input costs. This price freeze has resulted in an estimated industry-wide under-recovery of Rs 40,500 crore for the 2024-25 fiscal year.

Of the proposed subsidy, Rs 10,000 crore is expected to be disbursed during the current fiscal year, while the remaining Rs 25,000 crore will likely be allocated in the 2025-26 Union Budget, to be presented by Finance Minister Nirmala Sitharaman on February 1. The subsidy provision also includes compensation for potential tax liabilities, ensuring the full payout reaches the companies. IOC, BPCL, and HPCL had previously received Rs 22,000 crore for under-recoveries in 2021-22 and 2022-23. This amount was against a total under-recovery of Rs 28,249 crore. For the current fiscal, IOC is expected to bear the largest share of the losses at Rs 19,550 crore, followed by HPCL at Rs 10,570 crore, and BPCL at Rs 10,400 crore. Domestic LPG prices have been regulated to shield households from volatile international rates, which remain elevated. Despite this, fuel retailers face significant losses due to insufficient domestic production and reliance on costly imports.