Page 44 - Policy Economic Report - August 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Key Policy developments/Significant news in Energy sector

Cabinet approved Rs 30,000 crore as compensation to Public Sector Oil Marketing Companies for losses
in Domestic LPG

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, has approved compensation
amounting to Rs.30,000 crore to the three Public Sector Oil Marketing Companies (IOCL, BPCL & HPCL) for
the under- recoveries incurred on sale of domestic LPG. The distribution of the compensation within the
OMCs will be done by the Ministry of Petroleum and Natural Gas. The compensation will be paid in twelve
tranches.

Domestic LPG Cylinders are supplied at regulated prices to consumers by the public sector Oil Marketing
companies namely, IOCL, BPCL, HPCL.

The international prices of LPG remained at high levels during 2024-25 and continue to remain high.
However, to insulate consumers from fluctuations in international LPG prices, the increase in cost was not
passed on to consumers of domestic LPG which led to significant losses for the three OMCs. Despite the
losses, the Public Sector Oil Marketing Companies have ensured continuous supplies of domestic LPG in
the country at affordable prices.

This compensation will allow the OMCs to continue meeting their critical requirements such as crude and
LPG procurement, servicing of debt, and sustaining their capital expenditure, thereby ensuring
uninterrupted supply of LPG cylinders to households across the country.

This step also underlines the Government’s commitment to protect consumers from volatility in global
energy markets while maintaining the ?nancial health of these PSU OMCs. It also rea?rms the objective
of ensuring the widespread availability of clean cooking fuel to all consumers of domestic LPG, including
those under flagship schemes like PM Ujjwala Yojana.

Cabinet approved continuation of Targeted Subsidy for Pradhan Mantri Ujjwala Yojana Consumers for
2025-26 at Rs 12,000 Crore

The Union Cabinet chaired by the Prime Minister, Shri Narendra Modi, has approved the targeted subsidy
of Rs.300 per 14.2 kg cylinder for up to 9 re?lls per year (and proportionately pro-rated for 5 kg cylinder)
to the bene?ciaries of Pradhan Mantri Ujjwala Yojana (PMUY) during FY 2025-26 at an expenditure of Rs
12,000 crore.

Pradhan Mantri Ujjwala Yojana: Pradhan Mantri Ujjwala Yojana (PMUY) was launched in May, 2016 with
an objective to provide deposit-free LPG connection to adult women from poor households across the
country. As on 01.07.2025, there are about 10.33 crore PMUY connections across the country.

All PMUY bene?ciaries receive deposit-free LPG connection which includes Security Deposit (SD) of
Cylinder, Pressure Regulator, Suraksha Hose, Domestic Gas Consumer Card (DGCC) booklet and
installation charges. As per the existing modalities of Ujjwala 2.0, the ?rst re?ll and stove is also provided

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