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LPG Losses Hit ₹53,700 Cr: Subsidy Offers Partial Relief
20 Nov
Summary
- OMCs face ₹53,700 crore in LPG under-recoveries by September 2025.
- Government to release ₹30,000 crore LPG subsidy in 12 tranches.
- Subsidy covers only 56% of cumulative losses, widening the financial gap.
Oil Marketing Companies (OMCs) are grappling with substantial financial pressure from LPG under-recoveries, which have reached approximately ₹53,700 crore by the end of September 2025. The government intends to alleviate some of this burden by releasing an LPG subsidy amounting to ₹30,000 crore, to be disbursed in twelve equal monthly installments beginning in November 2025.
However, this financial assistance is projected to provide only partial relief. The declared subsidy is expected to cover just about 56% of the existing cumulative losses. With regional LPG prices historically rising during winter months, the financial gap for OMCs is anticipated to widen despite the subsidy support, as under-recoveries are predicted to increase further.
Beyond immediate subsidy concerns, OMCs face ongoing challenges. Their capital expenditure is expected to remain high due to long-term infrastructure projects, potentially impacting near-term return ratios. Furthermore, city gas distribution company valuations may face downward pressure due to uncertainties arising from evolving government policies.
