BPCL expects Rs 633 crore monthly compensation for under-recoveries on LPG sales
New Delhi, July 28
Bharat Petroleum Corporation Ltd. is in talks with the Central government regarding compensation for its under-recoveries on the sale of domestic LPG below the market prices amid the West Asia crisis, with the firm expecting a compensation of Rs 633 crore per month till October, according to an NDTV Profit report that cited a company statement on Tuesday.
The oil and gas company stated that it was confident of government backing regarding LPG losses, due to the fact that the firm has been selling its domestic LPG, petrol, and diesel below the market prices.
This development comes amid the ongoing conflict between Iran and the US in West Asia, which led to a choking of the Strait of Hormuz, through which 20 per cent of the world's oil and gas exports transit during normal times. This had led to a spike in global crude and gas prices.
BPCL's LPG compensation buffer was at Rs 15,804 crore as of June 30. This buffer includes an adjustment for Rs 7,594 crore. The public sector oil company expects the government to continue its LPG compensation schemes, in line with past practices.
The Central government informed the Lok Sabha on July 23 that state-run oil marketing companies are still under a lot of pressure due to high crude oil prices and LPG under-recoveries amid continuous geopolitical concerns in West Asia.
Brent oil prices "continue to heavily fluctuate and have increased again," Minister of State for Petroleum and Natural Gas Suresh Gopi said in a written reply. The crisis in West Asia "has not abated and the resultant geopolitical situation is highly volatile".
According to the minister, the public sector oil marketing companies have incurred huge losses on the sale of petrol, diesel, and LPG.
The government claimed that as of June 30, 2026, total under-recovery on the sale of domestic LPG by the public sector oil companies was above Rs 51,000 crore. Additionally, it stated that in July, non-Ujjwala clients received an implied subsidy of more than Rs 500 for each 14.2-kg LPG cylinder.
— IANS
Reader Comments
The West Asia crisis is indeed impacting global oil prices, but we in India have always had a system where subsidies are meant to protect the poor. Ujjwala beneficiaries getting subsidized cylinders is fine, but for non-Ujjwala users, Rs 500 per cylinder subsidy? That seems too much. Why not just let market prices work? 🤔
Under-recoveries of Rs 51,000 crore! That's staggering. But I feel for the oil companies - they are caught between global price spikes and government policies. The geopolitical situation in the Gulf is no joke. Strait of Hormuz disruption affects us directly. We need to diversify our energy sources and reduce dependency on oil. 😤
Instead of compensating BPCL with Rs 633 crore monthly, why not use that money to boost renewable energy projects? The government has to balance between keeping LPG affordable for households and ensuring oil companies don't bleed. But long-term, we need to move away from fossil fuels. West Asia is too volatile. 😊
As someone who follows the energy sector, this is interesting. BPCL has a buffer of Rs 15,804 crore which shows they have been preparing for this. But the government needs to be transparent about how much subsidy is actually reaching the poor versus being captured by the non-needy. Just my two cents from a policy perspective. 💭
Crisis in West Asia is hitting us where it hurts - our household budgets! My mother-in-law was worried about the LPG cylinder price. I hope the government continues the subsidy for Ujjwala beneficiaries at least. We need more strategic oil reserves
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