The decision comes at a time when LPG prices haven’t adjusted in line with the costs. The one-time grant given to OMCs with an amount of 22,000 crore will be included in additional demands for grants, according to the government.
I&B Minister Anurag Thakur noted that the prices in the international market for LPG increased by 30% between June 20, 2020, and the end of 2022. However, the higher cost wasn’t completely passed onto consumers, despite the fact that the domestic LPG prices increased by 72 percent in this time.
“OMC’s suffered significant losses between 2020-22 and therefore the government is making a one time grant to three OMCs,” the official said.Shares of state-run OMCs– Indian Oil Corporation, Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) — closed in green.
The rates for commercial LPG cylinders were updated earlier in the month, rates for LPG that is used in kitchens of households for cooking purpose remained constant at Rs 1,053 for a 14.2-kg cylinder. This is due to the fact that the rates of cooking gas used in the domestic market were much lower than the price, and due to a decrease of international costs, they’re near breakeven, industry sources informed PTI.
The price for domestic cylinders (14.2 kg) local cylindrical (14.2 kilograms) remains the same following a price hike of 50 rupees on July 6. The prices for domestic cylinders had been adjusted on May 19, 2022.
According to reports recently published that state-owned oil marketing firms Indian Oil Corporation, Bharat Petroleum Corporation Limited (BPCL) as well as Hindustan Petroleum Corporation Limited (HPCL) could at first in their history, suffer losses for the second straight quarter with a loss of around 21,270 crore from July to September due to the fact that they kept diesel and petrol prices at levels below the production cost.
The three state-owned companies -IOC, HPCL and BPCL IOC, BPCL and HPCL in the initial quarter of the fiscal year in full (April-June) recorded a loss of 18480 crores due to decrease in the margins of sales on diesel, petrol as well as domestic LPG.
ICICI Securities, in a report released last week, stated, “The three oil marketing companies IOC, BPCL and HPCL remain trapped in the quagmire of weak marketing losses, and there is not enough traction in refining margins.”
The three companies are expected to reveal second-quarter earnings later in the month or early in November.