Shares of Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd. gained on Monday after the Union Cabinet approved ₹30,000 crore in compensation to the three state-run oil marketing companies (OMCs) for losses from selling domestic LPG cylinders at below cost over the past 15 months.

Domestic LPG is supplied to households at government-regulated prices, which are often lower than international market rates. In 2024-25, global LPG prices stayed high, but the OMCs did not pass on the higher costs to consumers, leading to what are known as “under-recoveries”, losses incurred because the selling price is lower than the cost price.

The approved compensation will be distributed among IOC, BPCL, and HPCL by the Ministry of Petroleum and Natural Gas in 12 installments. According to the government, this support will help the companies meet essential expenses such as buying crude oil and LPG, repaying debt, and continuing investment in infrastructure.

This move reduces the financial strain on these companies. It improves their cash flow, helps protect profitability, and may strengthen their ability to maintain dividends or fund expansion projects. 

The move also reinforces the government’s commitment to shield consumers from volatility in global energy markets while maintaining the financial health of PSU OMCs. It supports the goal of making clean cooking fuel accessible to all households, including beneficiaries under the Pradhan Mantri Ujjwala Yojana.

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