LPG Loss Payout: The government has come forward to rescue the oil marketing companies (OMCs) from huge losses on selling LPG cylinders at a price lower than the cost. The government has formulated a scheme which will compensate the oil marketing companies for the loss of ₹ 30000 crore. Apart from this, the number of cylinders under the PM Ujjwala Yojana has been reduced. Read in details
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The government has taken two important decisions. One is that the loss incurred by the oil marketing companies (OMCs) due to the sale of LPG cylinders at a price lower than the cost will be compensated in installments. Apart from this, the number of cylinders available under the PM Ujjwala Yojana (PMUY) has been reduced from 12 to 9. Talking about the compensation of LPG loss, the Cabinet on Friday approved a cash compensation of ₹ 30,000 crore under which it will be given to the oil marketing companies in 12 installments. The first installment is expected to start in September-October this year.
What will happen by making payment in installments?
The government will compensate the loss of ₹ 30 thousand crore to the oil marketing companies in 12 installments due to the sale of LPG cylinders at a price lower than the cost. Due to this, oil marketing companies will get ₹15 thousand crores in this financial year 2026 and the remaining money will be given in the next financial year 2027 through the new budget which will be presented in February 2026. According to CNBC-TV18 sources, approval may be sought for withdrawal from the emergency fund for the compensation to be given in this financial year 2026. Now let’s talk about compensating the losses in installments, if ₹30 thousand crores are given to Indian Oil, Bharat Petroleum and Hindustan Petroleum together, then the fiscal deficit may increase by 8 basis points, whereas if it is given divided in FY 2026 and FY 2027, the financial impact may be reduced. The government has set a fiscal deficit target of 4.4% of GDP for this financial year 2026.
Subsidy will not be reduced in PM-Ujjwala Yojana
The Cabinet has increased the number of subsidized cylinders under the PM-Ujjwala Yojana to nine but the subsidy has not been cut. Approving the scheme’s budget allocation of ₹12,060 crore for FY 2026, the government has retained the subsidy of ₹300 per cylinder on 14.2 kg cylinder. According to government data, LPG consumption of families covered under the PM Ujjwala Yojana has improved from an average per capita consumption of three refills in FY 2020 to about 4.47 during FY 2025.
