Retailers’ cooking gas losses dip in August, but government dues top Rs 59,000 crore

Synopsis

Fuel retailers' revenue loss on subsidized LPG narrowed to Rs 188 per cylinder in August. This marks a sharp decrease from the Rs 500 loss reported in the previous month. The government paid Rs 30,000 crore to clear past subsidy dues. However, outstanding payments to retailers still exceed Rs 59,000 crore. This compensation mechanism shields households from price volatility.

The revenue loss incurred by India's state-owned fuel retailers on subsidised cooking gas sales narrowed sharply to Rs 188 per 14.2-kg LPG cylinder in August, from Rs 500 in July, junior oil minister Suresh Gopi told Parliament on Monday.

Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation have been selling a 14.2-kg domestic LPG cylinder for Rs 942 in Delhi since June 2026. The companies sell cooking gas to households at prices below market rates and are compensated by the government for the resulting revenue gap with a lag.

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Gopi, in a written reply to lawmakers, said the government had paid Rs 30,000 crore in subsidies to clear part of the dues for 2025-26 and 2026-27. However, outstanding dues owed to state-run fuel retailers for LPG sales remained above Rs 59,000 crore as of July 31.

The government's compensation mechanism is aimed at shielding households from sharp swings in international LPG prices while ensuring that state-run oil marketing companies do not bear the entire cost of selling cooking gas below market rates.

The latest decline in the revenue gap comes after retailers faced a significantly higher loss of Rs 500 per cylinder in July.

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The government has historically used subsidies and other support measures to keep domestic LPG affordable, particularly for household consumers. The gap between the market-linked cost and the retail price is subsequently compensated through government payments.

India imports a significant share of its LPG requirements, leaving domestic cooking gas prices exposed to international energy prices, freight costs and currency movements.

The government has also taken steps to prioritise domestic LPG supplies amid disruptions and volatility in global energy markets. The subsidy burden and pending compensation to state-run fuel retailers therefore remain important factors in the finances of the country's oil marketing companies.

(With inputs from Reuters)