New Delhi : The Finance Ministry is close to finalising a compensation package for state-run oil marketing companies (OMCs) to help them recover losses from selling subsidised liquefied petroleum gas (LPG). The compensation will be routed through the Consolidated Fund of India and funded by recent hikes in excise duty on petrol and diesel. The news report mentioned that although excise collections usually go into general revenue, the government sometimes redirects part of these funds to support OMCs. This approach helps ease the fiscal impact of shielding consumers from global fuel price swings without straining the expenditure budget immediately.
The Expenditure Finance Committee (EFC) has already held key meetings in March and May to discuss the dues owed to oil companies. Between April and December 2024, oil companies are estimated to have suffered a cumulative under-recovery of about ₹30,000 crore due to high global fuel prices. The Ministry of Petroleum and Natural Gas had approached the Finance Ministry before the 2025 Budget, seeking financial support, the news report said. It approved a one-time compensation of ₹22,000 crore for similar losses incurred in FY22.The current package will allow OMCs like Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL) to use the funds either to offset past losses or to invest in infrastructure.
India is preparing to source around 10 per cent of its liquefied petroleum gas (LPG) imports from the United States starting 2026, Reuters reported. It is part of a broader strategy to increase energy imports from the US to help narrow trade imbalance between the two countries. India is the world’s third-largest importer and consumer of oil, and depends largely on West Asian nations for its LPG supply. Around 90 per cent of India’s total LPG imports, amounting to about 20.5 million metric tonnes, came from the region in 2024.
LPG, a blend of propane and butane primarily used as cooking fuel, is imported by state-owned oil marketing companies, including Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation. These companies supply subsidised LPG to households across India.
India had limited engagement with US suppliers for LPG due to higher shipping costs. However, that has started to change. State-run companies began purchasing US LPG in May after China introduced retaliatory tariffs on American propane, making it more accessible for Indian buyers.
The Indian government is exploring the creation of three new strategic petroleum reserves. According to another Reuters report, these new sites are intended to increase India’s emergency fuel stockpile. Engineers India Ltd, a state-owned consultancy, is currently conducting feasibility studies for the proposed reserves.
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