OMCs Face Massive Losses on LPG Sales; Government Braces for Fiscal Hit

• Oil Marketing Companies (OMCs) are incurring under-recoveries of ₹380 per domestic LPG cylinder, potentially leading to cumulative losses of ₹40,484 crore by May end.
• The Finance Ministry is expected to face a significant fiscal impact due to these losses and the ongoing war in West Asia.
• Last fiscal year, the government compensated OMCs ₹30,000 crore for total losses of ₹60,000 crore on subsidized domestic LPG sales.
• OMCs have increased commercial LPG cylinder prices twice since the war began, but domestic LPG prices remain unchanged.
• The surge in commercial cylinder prices is attributed to a 44% increase in Saudi Contract Price due to global LPG supply disruptions in the Strait of Hormuz.

Key Questions Answered

How will the government fund these LPG losses?

The government is likely to face a fiscal hit to compensate Oil Marketing Companies (OMCs) for significant losses on domestic LPG sales.

Could LPG prices increase for consumers soon?

Commercial LPG cylinder prices have increased by ₹203 on April 1, 2026.

What is the impact of the West Asia war on India's oil?

The West Asia war is impacting India through increased oil prices, affecting cooking oils, Aviation Turbine Fuel (ATF), and premium petrol.