Cabinet approves Rs 22,000 crore grant for state-run OMCs to compensate LPG losses

The Union Cabinet, in its meeting on October 12, approved a one-time grant of Rs 22,000 crore to state-run oil marketing companies (OMCs) for losses incurred in liquefied petroleum gas (LPG).

"Cabinet approves Rs 22,000 crore as one time grant to PSU OMCs for losses in Domestic LPG. It will help the PSU OMCs to continue their commitment to the Atmanirbhar Bharat Abhiyaan, ensuring unhindered domestic LPG supplies," the Centre said in an official release.

The announcement came hours after CNBC TV-18 broke the story. The news channel had also claimed that government is mulling an additional grant for state-run OMCs to compensate them for their losses on petrol and diesel sale.

The three biggest state-run retailers - Indian Oil Corp, Bharat Petroleum Corp, and Hindustan Petroleum Corp - which together supply more than 90 percent of India’s petroleum fuels have suffered the worst quarterly losses in years by absorbing record international crude prices.

The companies have also been holding down pump prices of gasoline and diesel since early April to curb accelerating inflation.

The government had earmarked oil subsidies at Rs 5,800 crore for the fiscal year ending March.

India imports about half of its liquefied petroleum gas, generally used as cooking fuel. The price of the Saudi contract price, the import benchmark for LPG in India, has increased 303 percent in the past two years, while the retail price in Delhi was increased by 28 percent, India’s Oil Minister Hardeep Singh Puri said on September 9.