India announced a relief package of Rs 22,000 crore for public sector oil marketing companies to ease the losses borne on account of rising global fuel prices.
The amount will be given to public OMCs as a one-time grant to make up for the losses incurred on account of the LPG price rise from 2020 to June 2022, I&B Minister Anurag Thakur said after the cabinet meeting on Wednesday.
Thakur told reporters that LPG prices globally have seen a 300% rise, and the one-time grant is expected to alleviate the burden on public OMCs so that the cost is not transferred to the end-users.
In terms of the burden on the public exchequer, ICRA Ltd.'s Chief Economist, Aditi Nayar expects the additional spending to have a modest impact on the fiscal deficit as higher than budgeted revenues will soften the impact.
Public sector OMCs like Indian Oil Corporation Ltd., Bharat Petroleum Corporation Ltd., and Hindustan Petroleum Corporation Ltd. will be beneficiaries of this grant for losses pertaining to LPG prices.
Earlier in September, Union Petroleum Minister Hardeep Singh Puri, speaking at an event in Mumbai, hinted at the need for a "financial cushion" for public OMCs to save them from defaulting.
State-owned OMCs are said to have suffered marketing margin losses and reported an approximately Rs 18,500-crore loss in the first quarter of the fiscal as the regulated retail fuel price remained unchanged since April 6.
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