Oil companies will get relief
If you have bought a gas cylinder in the last few times, then you may have expressed a little anger about its price. But do you know that government oil companies like Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) are selling LPG cylinders at less than their cost? These companies have lost thousands of crores due to this. But now there is news that the government is preparing to give relief to these companies. If sources are to be believed, the government can give subsidy ranging from 30,000 to 35,000 crore rupees to these companies. After this news, a tremendous jump in the shares of these companies is expected.
Oil companies will get relief
Actually, there was no mention of such subsidy in the budget in February 2025. But in April, the government secretly increased excise duty on petrol and diesel. With this, the government earned an additional earning of around Rs 32,000 crore. It is now believed that this money will be used to compensate the losses made to the oil companies. A government official said, “These oil companies belong to the government. The government will fulfill their loss. We are now seeing how much loss and how it will be compensated.”
40,500 crore loss on LPG
Let us tell you that the government decides the prices of LPG in India so that the common people get relief from expensive prices. But due to the high LPG prices in the international market, oil companies have to suffer losses. This is called ‘Under-rich’. These companies are estimated to have a loss of about Rs 40,500 crore by selling LPG in this financial year (2024-25). The demand for LPG in India is so high that to fulfill it, one has to buy gas from outside, due to which this damage is done.
Increase in gas cylinder price reduced losses
In April, the government had increased the price of 14.2 kg domestic gas cylinder by Rs 50. This has reduced the difference between the real cost of gas and the price of sales. That is, oil companies are now losing slightly less loss than before. But still the deficit is so big that the government has to take steps to compensate for it.
Where will the compensation money come from?
The first government was thinking of giving subsidy of Rs 35,000 crore in two years. But now there is a plan to give the additional money that has come from the increased tax on petrol and diesel as compensation to the oil companies. An official said that this money can be given from ‘Consolidated Fund of India’. As soon as this compensation plan is final, it will be sent to the cabinet for approval.
Payment of losses was done earlier also
This is not the first time that the government is helping oil companies. Earlier in 2021-22 and 2022-23, the government had given subsidy of Rs 22,000 crore to IOC, BPCL and HPCL, while their total deficit was Rs 28,249 crore. At that time also these companies used this money to improve their projects and operations.
Investors’ eye on cabinet decisions
As soon as this subsidy will be approved by the cabinet or it will be officially announced, IOC, BPCL and HPCL shares can see a tremendous jump. Stock market experts consider it a ‘positive trigger’. If you are thinking of investing in the shares of these companies, then keep an eye on this news.
Disclaimer: This article is only for information and should not be considered as an investment advice in any way. TV9 India suggests its readers and spectators to consult their financial advisors before taking any decision related to money.