LPG Cylinder Prices: The Union Cabinet on Friday approved Rs 30,000 crore subsidy for the Oil Manufacturing Companies (OMCs) to keep the LPG prices stable in the country and to compensate government-owned oil companies for the losses they incur by selling cooking gas below market prices.
The decision holds significance amid concerns that cooking gas prices may see a significant increase after US President Donald Trump announced additional tariffs on India for buying Russian crude oil.
Despite high global fuel prices, oil marketing companies kept cylinder prices unchanged throughout the year, which led to heavy under-recoveries in LPG, affecting their profits. The country relies largely on imports for domestic LPG consumption.
Oil marketing companies incurred a loss of about Rs 30,000 crore during April and December 2024 due to high international fuel prices. Considering the financial strain, the Ministry of Petroleum had approached the Ministry of Finance before the 2025 Budget, seeking a subsidy to reduce these losses.
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What Union Petroleum Minister Said?
Petroleum and Natural Gas Minister Hardeep Singh Puri had said that along with petrol and diesel, LPG gas could also become cheaper. In that case, LPG prices may see a decline in the coming days along with petrol and diesel. This subsidy will directly benefit companies such as Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation — the ones that bear the brunt of global price fluctuations in order to maintain domestic affordability.
Through this capital assistance, the government aims to protect consumers from price hikes amid inflationary pressures and rising crude oil prices.
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The government has previously provided subsidies to oil marketing companies to offset losses from keeping LPG prices stable despite global volatility. In October 2022, it approved a one-time compensation of Rs 22,000 crore for under-recoveries incurred in FY22. In the same manner, oil marketing companies are now likely to receive subsidies to cover their current losses.