Oil companies may mop up Rs 9000 crore via LPG price hike, higher petrol, diesel excise duty

The government announced a Rs 50 hike in LPG prices and proposed Rs 2 excise duty increase on petrol and diesel, seeking to use this to compensate oil marketing companies (OMCs) for their Rs 41,338 crore losses in FY25. According to a report by CNBC TV18 which cited sources, state-run OMCs — Hindustan Petroleum Corporation Ltd (HPCL), Bharat Petroleum Corporation Ltd (BPCL), and Indian Oil Corporation Ltd (IOC) — are expected to mop up nearly Rs 9,000 crore in FY26.

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Per senior government officials as quoted by CNBC TV18, the Oil Ministry is planning to ask Cabinet for approval of Rs 32,000 crore compensation package to offset the Rs 41,338 crore losses suffered by OMCs in FY25 on subsidised LPG sales. The 32,000 crore mop-up is expected to come from the hike of Rs 2 in excise duty on petrol and diesel. However, Oil minister Hardeep Singh Puri had maintained that the excise hike will not be passed on to the consumers as oil companies will absorb the hike on improved margin. 

“Crude oil prices have softened, and current inventory averages are around $75 per barrel. With crude expected to stabilise between $60 and $65 per barrel, OMCs will have better margins,” an official said.

The excise duty on petrol is Rs 19.9 as on April 1, 2025 and after the hike, it will become Rs 21.9 and for diesel the duty will rise to Rs 17.8 from Rs 15.8.

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