Oil ministry's allocation in Budget 2025 rises 11% from last year

The increase in allocation comes as the oil companies are increasing their refining capacity to meet India’s rising energy needs.

The Union Budget 2025 allocated Rs 19,326 crore to the ministry of petroleum and natural gas (MoPNG), an increase of 11.28 percent from the allocation of last year at Rs 17,367 crore (revised estimates). The FY26 allocation is 21.31 percent higher from last year’s Budget estimates of Rs 15,930 crore.

The government granted Rs 12,100 crore to the oil marketing companies (OMCs) for liquified petroleum gas (LPG) subsidy in the Budget, compared to Rs 14,700 crore (RE) received for the fiscal 2024-25.

The state-run refiners’ under-recovery on sale of LPG cylinders is much higher in FY25 than the funds allotted. IOCL reported an under-recovery of Rs 14,325 crore on LPG cylinders in the first nine months of 2024-25. BPCL and HPCL reported under-recovery of Rs 7,228 crore and Rs 7,599 crore, respectively, in the first nine months of FY25.

For strategic oil reserves, the government issued fund of Rs 5,876 crore for fiscal 2025-26, a sharp jump from Rs 130 crore (RE) granted last year.

The Pradhan Mantri JI-VAN Yojana, a programme to promote biofuels adoption and accelerate ethanol blending in petrol, has been given Rs 117 crore for the fiscal 2025-26. This compares to allocation of Rs 30 crore (RE) for the scheme in the previous year.

The scheme supports the development of advanced biofuel technologies to help achieve India’s ambitious target for net-zero GHG emissions by 2070. As part of the programme, the Indian government aims to achieve 20 percent ethanol blending in petrol by Ethanol Supply Year 2024-25, which ends in October 2025.

In August 2024, the Cabinet had extended the programme by five years to fiscal 2028-29.

The government also issued Rs 700 crore to Indradhanush Gas Grid Limited (IGGL), a marginal increase from Rs 612 crore (RE) in the previous year.

IGGL is a joint venture company of five Central Public Sector Enterprises (CPSEs) including IOCL, ONGC, GAIL, OIL and NRL for the development of North East Gas Grid to connect eight states of North Eastern India.