The government would provide a one-time compensation of Rs 22,000 crore to three state-owned fuel dealers to compensate them for losses experienced in the last two years by selling domestic cooking gas LPG below cost, said I&B Minister Anurag Thakur on Wednesday.

At a meeting on Wednesday, the Union Cabinet, led by Prime Minister Narendra Modi, approved a one-time gift to three oil marketing companies: Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd. (HPCL), Thakur stated at a press conference.


The subsidy will replace the losses they suffered by selling LPG at a loss to consumers between June 2020 and June 2022. International LPG prices increased by roughly 300 percent between June 2020 and June 2022.

However, in order to protect consumers from volatility in international LPG prices, the cost rise was not entirely passed on to local LPG consumers, according to an official statement. As a result, domestic LPG prices rose by just 72% throughout this time, resulting in considerable losses for the three companies.

“Despite these losses, the three PSU OMCs have guaranteed that this important cooking fuel is available throughout the country. As a result, the government has decided to provide a one-time grant to the three PSU OMCs for their domestic LPG losses “It stated.

The Union Cabinet authorized a Rs 22,000 crore one-time payout to the three oil marketing corporations (OMCs). “This decision will assist the PSU OMCs in maintaining their commitment to the Atmanirbhar Bharat Abhiyaan by assuring uninterrupted domestic LPG supplies and promoting the acquisition of Make in India products.”

Since early April, the businesses have also kept gasoline and diesel pump prices low in order to slow the rate of inflation. The government had budgeted Rs 5,800 crore for oil subsidies for the fiscal year ending March.

India imports over half of its liquefied petroleum gas, which is mostly used as cooking fuel. According to India’s Oil Minister Hardeep Singh Puri, the price of the Saudi contract price, the import benchmark for LPG in India, has climbed 303 percent in the last two years, while the retail price in Delhi has increased by 28 percent.

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