Oil PSUs' losses on LPG sales below market price cross Rs 59,000 crore
New Delhi, Aug 10
The cumulative under-recoveries of the government-owned oil marketing companies -- Indian Oil, Bharat Petroleum and Hindustan Petroleum -- on the sale of domestic LPG below the market price due to the West Asia crisis have surpassed Rs 59,000 crore as of July 31, the Parliament was informed on Monday.
he retail selling price (RSP) of domestic LPG is being maintained at Rs 942 per 14.2 kg cylinder (Delhi) since June 2026, which carried an implicit subsidy (under-recovery) of more than Rs 700 per cylinder in June 2026 and Rs 500 per cylinder during July 2026, Minister of State for Petroleum and Natural Gas Suresh Gopi said in a written reply to a question in the Rajya Sabha.
During August, the retail selling price of a 14.2 kg cylinder carries an implicit subsidy of Rs 188 per cylinder, the government said.
The effective price of LPG for more than 10.5 crore Ujjwala beneficiaries is Rs 642 per cylinder (up to 4 refills per year), after a targeted subsidy of Rs 300 per cylinder.
The government has paid the oil marketing companies a compensation of Rs 22,000 crore in FY23 and will be paying Rs 30,000 crore in FY26 and FY27.
"Even after the payment of this compensation, accumulated under-recoveries of the public sector oil companies on domestic LPG were more than Rs 59,000 crores as of 31 July 2026 itself," the minister said.
Indian Oil, Bharat Petroleum, and Hindustan Petroleum have been selling domestic cooking gas below the market prices, which has led to the piling up of huge under-recoveries, after the international prices of LPG surged significantly following the West Asia war and closure of the Strait of Hormuz.
Expressed as the 50:50 propane-butane blend used for India's LPG, the Saudi CP for LPG stood at about $543 a tonne in February, before the disruption. Following the closure of Hormuz in late February, the April contract price, the first set after the disruption tightened Mideast Gulf exports, rose to $775 a tonne, with propane at $750 and butane at $800, and has since edged up further to $790 a tonne in June, as per the official data. The blended LPG benchmark has thus risen by about 46 per cent since the pre-crisis February level.
The minister also informed the Parliament that despite unprecedented volatility in international crude oil and product prices due to conflicts and other extraneous factors, the increase in prices of petrol and diesel at retail outlets in India between June 2021 and June 2026 has been much lower than in major developed and neighbouring countries.
Government data shows that India recorded an 8.1 per cent rise in retail petrol prices and a 11.5 per cent increase in diesel prices between June 2021 and June 2026.
— IANS
Reader Comments
Middle-class families are also struggling. Even at Rs 942 per cylinder, it's not cheap. The implicit subsidy calculation seems to fluctuate every month, and the clarity is missing. At least the government should announce a fixed subsidy amount instead of these vague numbers.
It's interesting to see how India is managing energy prices amid global turmoil. The comparison with other countries is important, and the 8-11% increase in fuel prices over 5 years is actually quite impressive. But these under-recoveries could hurt the oil PSUs' investments in the future.
Why is the government compensating only Rs 30,000 crore when losses are Rs 59,000 crore? The remaining amount will eventually affect the PSUs' profitability. Also, isn't it time to review the Ujjwala subsidy targeting? Some people are misusing it while deserving families wait.
This is a global issue. With the Strait of Hormuz closed, energy prices are skyrocketing everywhere. India's approach of absorbing the shock via subsidies is admirable, but long-term, we need to diversify our energy sources. The government should fast-track renewable projects and explore alternative LPG imports.
I appreciate the government for not letting the common man suffer due to global conflicts. But let's be practical—this Rs 59,000 crore is borrowed from somewhere. It's essentially a deferred burden on taxpayers. I wish the government would publish a clear plan to recover these costs without sudden shocks to consumers.
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