Oil PSUs to get ₹22,000 crore grant to offset LPG losses
The Cabinet approved a grant of ?22,000 crore for state-run oil marketing companies on Wednesday to compensate them for losses incurred by selling cooking gas at below-market rates.
The grant will be distributed among the three corporations –
, Bharat Petroleum and – and help ensure an “unhindered” supply of domestic cooking gas or LPG, said an official statement.
International prices of LPG had increased 300% between June 2020 and June 2022 but domestic price increases were only 72%, leading to significant losses for oil marketing companies, according to the statement. “To insulate consumers from fluctuations in international LPG prices, the cost increase was not fully passed on to consumers of domestic LPG,” it said.
A direct grant to oil companies to offset their losses on LPG sales is being made after a long time. For several years now, companies have been expected to sell cooking gas at market rates to customers, who then receive subsidies directly in their bank accounts from the government.
After the onset of Covid-19 in early 2020, which brought down the prices of LPG in the international market, the subsidy was eliminated. But after international prices again started rising, the domestic rates did not go up proportionately, saddling oil companies with losses. The grant will help offset those losses.
Oil companies had initially demanded a grant of ?44,000 crore but the government agreed to offer only half of it.
Nod for Container terminal
The Cabinet also approved a proposal to develop a container terminal at Tuna-Tekra, Deendayal Port, in Gujarat under the public-private partnership mode.
The estimated cost of ?4,243.64 crore will be on the part of the concessionaire while common user facilities of ?296.20 crore will be borne by the concessioning authority.
During the concession period, the concessionaire will have the liberty to handle vessels up to 18 metre-draught by deepening or widening its approach channel, berth pocket and turning circle.