Govt to provide Rs 30,000 crore LPG subsidy to oil PSUs in FY26

New Delhi: The Government of India has approved Rs 30,000 crore in compensation for FY 2025–26 to public sector oil companies for supplying LPG at subsidised rates, Parliament was informed on Thursday.

The subsidy will be provided to state-run oil marketing companies — Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum — to offset losses incurred from selling LPG below market prices.

Currently, the retail selling price of a 14.2 kg domestic LPG cylinder is Rs 913 in Delhi.

Under the Pradhan Mantri Ujjwala Yojana (PMUY), the government provides a targeted subsidy of Rs 300 per cylinder to economically weaker households. As a result, beneficiaries are able to purchase a 14.2 kg LPG cylinder at an effective price of Rs 613 in Delhi, said Suresh Gopi in a written reply in the Lok Sabha.

To strengthen domestic LPG availability, the Ministry of Petroleum and Natural Gas has directed oil refineries and petrochemical complexes to channel C3 and C4 streams toward LPG production and supply it exclusively to public sector oil companies.

These directives have been issued under the Essential Commodities Act, the minister added.

Gopi also noted that the government, through a special purpose vehicle called Indian Strategic Petroleum Reserve Limited (ISPRL), has created strategic petroleum reserve facilities with a capacity of 5.33 million metric tonnes of crude oil. These reserves are aimed at helping the country manage supply disruptions, including those linked to the Iran conflict.

The minister further stated that petrol and diesel prices in India are market-determined, with oil marketing companies taking the final call on retail rates.

However, the government occasionally intervenes through fiscal measures to ease the burden on consumers. For instance, central excise duty was reduced by Rs 13 per litre on petrol and Rs 16 per litre on diesel in two phases in November 2021 and May 2022, and the benefits were fully passed on to consumers.

In March 2024, oil marketing companies also reduced petrol and diesel prices by Rs 2 per litre each. Later, when the government increased excise duty by Rs 2 per litre in April 2025, the hike was not passed on to consumers, the minister said.

With inputs from IANS