Anurag Thakur, the minister of information and broadcasting, announced on Wednesday that the Union cabinet had approved a one-time grant of $22,000 crore to three state-owned fuel retailers to make up for the losses they incurred from selling domestic cooking gas LPG below cost in the previous two years.
The decision was taken in a cabinet meeting chaired by Prime Minister Narendra Modi on Wednesday. The one-time grant will be given to three oil marketing companies—Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL), and Hindustan Petroleum Corporation Ltd (HPCL), Thakur said at a media briefing.
The grant will be used to pay for the losses incurred from June 2020 to June 2022 when selling LPG below cost to consumers.
The three companies offer clients domestic LPG at prices that are governed by the government. The price of LPG on the international market increased by over 300% between June 2020 and June 2022.
The government said the approval will help the Public Sector Undertaking Oil Marketing Companies (PSU OMCs) continue their commitment to the “Atmanirbhar Bharat Abhiyaan”, ensuring unhindered domestic LPG supplies and also supporting the procurement of Make in India products.
“During the period from June 2020 to June 2022, the international prices of LPG increased by around 300 percent. However, to insulate consumers from fluctuations in international LPG prices, the cost increase was not fully passed on to consumers of domestic LPG. As a result, domestic LPG prices rose by only 72% during this period.This has led to significant losses for these OMCs,” the government said.
The three PSU OMCs have maintained consistent supplies of this crucial cooking fuel in the nation despite these losses, it said.