Cabinet Clears ₹30,000 Crore Relief for OMCs; BPCl, HPCL, IOCL in Focus

The Union Cabinet has sanctioned a relief package worth ₹30,000 crore for state-owned oil marketing companies — Indian Oil Corporation (IOCL), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL). The move is aimed at covering heavy losses sustained from selling domestic LPG at below-market rates.

Officials confirmed that the compensation will be released in 12 instalments, helping these companies maintain steady supplies of cooking gas despite elevated international fuel prices. The decision comes after estimates showed under-recoveries in the sector exceeded ₹41,000 crore during FY 2024–25, largely due to the government’s commitment to keeping household LPG prices in check.

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Alongside the payout to OMCs, the Cabinet has approved ₹12,000 crore for the continuation of the Pradhan Mantri Ujjwala Yojana (PMUY) in 2025–26. Under PMUY, eligible households receive a subsidy of ₹300 per 14.2 kg cylinder for up to nine refills each year. This measure has been credited with expanding access to clean cooking fuel in rural and low-income areas.

Industry analysts say the support package is vital for maintaining the operational health of OMCs. The funds will help them meet procurement costs, service debt, and invest in infrastructure while shielding consumers from the full brunt of global price volatility.

Impact on Shares

Investor sentiment reacted favourably. Shares of IOCL closed upside by 1.07%, BPCL closed up by 0.47% and HPCL rose by as much as 0.21% on the day of the announcement, reflecting renewed confidence in the companies’ financial outlook. Market experts noted that the government’s intervention not only safeguards household budgets but also ensures the stability of critical fuel supply chains.

Conclusion

The two rulings, which reimburse OMCs for previous LPG losses and provide targeted subsidies under PMUY, support the government's approach of striking a balance between social welfare and budgetary discipline. The goal of the policy is to safeguard customers and the larger energy ecosystem from outside shocks by ensuring inexpensive access to cooking gas and supporting the finances of public sector energy companies.