The central government of India is poised to provide significant relief to major state-owned oil companies, including Indian Oil Corporation Limited, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation Limited. A proposed subsidy of ₹35,000 crores aims to offset losses incurred from LPG sales. This financial support comes in light of recent reports indicating that these companies have maintained the LPG cylinder price at ₹803 despite rising raw material costs.
Estimating Total Losses at ₹40,500 Crores
For the current financial year, oil companies are projected to face a staggering total loss of ₹40,500 crores due to LPG sales. Observers within the industry have noted that the government is preparing to offer a subsidy of ₹35,000 crores, which will significantly aid these companies in recovering from their financial setbacks.
Subsidy Announcement Expected in Upcoming Budget
According to reports, the government plans to distribute the subsidy in two phases: the first phase will release ₹10,000 crores during the current financial year, while the remaining ₹25,000 crores will be allocated in the subsequent financial year, 2025-26. This announcement is anticipated to be made during the upcoming budget presentation on February 1, 2025, emphasizing the government’s commitment to supporting its major public sector enterprises.
Government’s Ongoing Subsidy Support
The Indian government has a history of providing subsidies to mitigate the losses faced by IOC, BPCL, and HPCL. In the past two financial years (2021-22 and 2022-23), the government allocated ₹22,000 crores as compensation for these companies’ losses, which totaled ₹28,249 crores across those years. For the ongoing financial year, the estimated under-recovery of ₹40,500 crores comprises projected losses of ₹19,550 crores for IOC, ₹10,570 crores for HPCL, and ₹10,400 crores for BPCL.
Conclusion
This potential subsidy from the government will not only assist these major oil companies in stabilizing their financial health but also ensure continued access to affordable LPG for consumers in India. By supporting these entities, the government underlines its dedication to maintaining energy affordability while navigating the challenges posed by fluctuating global oil prices.