Oil companies losses on LPG expected to decrease by around 45% in FY26 if crude prices remain at USD 65 per barrel: Report
New Delhi [India], May 17 (ANI): LPG losses incurred by oil marketing companies (OMCs) are expected to decrease by around 45 per cent in FY26 if crude oil prices remain stable at USD 65 per barrel, according to a report by CareEdge Ratings.
The report stated that the cumulative LPG under-recoveries are likely to reduce significantly next fiscal year, mainly due to a mix of higher retail prices and lower international LPG prices.
It said 'Cumulatively, the LPG under-recoveries are expected to decrease by ~45% in FY26 if crude oil prices remain around USD 65/bbl'.
These under-recoveries refer to the losses suffered by oil companies when they sell LPG cylinders below their cost price, as prices are regulated by the government to keep cooking gas affordable for households.
In India, around 90 per cent of LPG consumption is used for household cooking, while the remaining 10 per cent is used in industrial, commercial, and automotive sectors.
Over the last ten years, the number of domestic LPG consumers has doubled, reaching approximately 33 crores as of April 1, 2025.
The report mentioned that due to this sharp rise in consumers, LPG consumption has grown faster than domestic production. Indian refiners have not increased LPG output enough to meet demand, leading to a greater reliance on imports.
In FY25, around 60 per cent of the domestic LPG requirement was met through imports, compared to about 46 per cent a decade ago.
In FY25, oil marketing companies suffered significant LPG under-recoveries of nearly Rs 220 per 14.2 kg cylinder. This resulted in a total loss of Rs 41,270 crore for the three major OMCs combined, putting pressure on their profitability.
As a result, the combined profit after tax (PAT) of these companies fell from about Rs 85,000 crore in FY24 to Rs 35,000 crore in FY25.
However, the recent hike in retail LPG prices by Rs 50 per cylinder, effective from April 8, 2025, is expected to reduce under-recoveries by 25 per cent in FY26.
In addition, international LPG prices are also likely to soften, as the Saudi Contract Price, the global benchmark for LPG, has declined in March and May 2025.
This fall, driven by lower crude oil prices, may further reduce under-recoveries by around 20 per cent in FY26, the report added. (ANI)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
4 minutes ago
- Economic Times
Long live cash! Even as cashless is in
Even if no more the king it once was, demand for cash remains strong, despite the strides taken in digital payments. The inherent contradiction should not be difficult to resolve, given the rate of economic growth that fuels demand for both cash and cashless transactions. Inflation has an impact on demand for cash by affecting the opportunity cost of holding it. Demographics, too, plays a role. Older people prefer to deal in cash over tech-enabled payment mechanisms. Degree of formalisation of the economy also has a bearing, with financial exclusion acting as a constraint to cashless transactions. Concentration of demand for cash among populous Indian states can be traced back to reverse migration during the pandemic, and the consequent surge of currency in circulation. The event has had a long tail, with rural incomes taking much longer to recover to pre-pandemic levels. This affects cash-holding behaviour, as does spending patterns that spike with festivals. Consolidation among state-owned banks has contributed to the need for bigger cash holdings by regulating the numbers of ATMs in remote locations. India also experiences a rise in currency demand during elections. Since these are spread out over the year, this acts as a prop for cash. Economic factors for currency demand are persistent forces, with behavioural effects being less significant. By this yardstick, cash transactions will eventually decrease as a share of the nominal GDP. There may, however, be scope for policy to address the behavioural motives for holding cash. A young population with access to technology should influence the cultural preference for dealing in cash, as will progressive urbanisation. India is part of a global phenomenon of rising demand for cash, including in advanced economies with almost universal access to banking services. Further integration into the global economy will create demand for Indian currency outside the country, even as current domestic factors lose some of their significance.
Time of India
10 minutes ago
- Time of India
Sharma dials Punjab CM over Ferozepur feeder project
Jaipur: CM Bhajan Lal Sharma Wednesday dialled Punjab CM Bhagwant Mann to discuss progress of Ferozepur Feeder Reconstruction Project. This is likely to expedite the feeder reconstruction work crucial for Rajasthan farmers in Gang Canal area. Sharma said the Gang Canal system, the lifeline of the northwestern region, especially Sriganganagar and Hanumangarh, will be strengthened. The feeder reconstruction project was approved by Central Water Commission in April with Punjab sharing 58.5% and Rajasthan 41.5% of the total project cost of Rs 647.6 cr. Reconstruction of the feeder will increase its capacity from 11,192 cusecs to 13,842 cusecs, allowing water which flows to Pakistan in monsoon to be conserved in Gang Canal area. tnn
Time of India
14 minutes ago
- Time of India
Basmati export centre coming up in Pilibhit to boost premium production
Pilibhit: Farmers in Pilibhit are preparing to take their high-quality Basmati rice to over 100 countries with support from the Agricultural and Processed Food Products Export Development Authority (APEDA). Tired of too many ads? go ad free now To boost exports and improve local production, APEDA is setting up Uttar Pradesh's second Basmati Export Development Foundation (BEDF) in Pilibhit, following a Rs 10 crore project in Meerut. The move comes after efforts by Union minister of state for commerce and industry Jitin Prasada who is also the MP of Pilibhit. APEDA has now approved a 7-acre plot at the govt agriculture farm in Tanda Bijesi village for the BEDF. BEDF joint director Dr Ritesh Sharma said India exports Basmati rice to over 100 countries, including in Europe, the US, and the Middle East and that "a significant share of India's agricultural foreign exchange earnings comes from Basmati exports, with major contributions from Punjab, Haryana, and western Uttar Pradesh". The proposed BEDF in Pilibhit will include a research, demonstration, and training centre; a high-quality seed production unit; and a world-class NABL-accredited lab to test Basmati DNA, pesticide residues, and heavy metals: requirements crucial to meet global export standards. "The BEDF aims to promote high-quality Basmati cultivation in Pilibhit, train farmers in advanced techniques, and provide marketing support, particularly for exports. Farmers will also be trained to produce nucleus Basmati seeds," said Sharma. He added, "Entrepreneurs and exporters involved in paddy processing and seed production will also receive training in scientific techniques. The programme will be free of cost and will benefit farmers from other states as well." Tired of too many ads? go ad free now Despite being one of UP's top coarse paddy producers, Pilibhit lags in Basmati cultivation due to a lack of marketing support and absence of a govt procurement scheme under the minimum support price (MSP) structure, discouraging many farmers from switching. District agriculture records show paddy is grown on 1.45 to 1.47 lakh hectares annually, but Basmati is limited to just 7,000–8,000 hectares. While Basmati yields 40–45 quintals per hectare compared to 60–65 for coarse paddy, its market price makes up for it. "In 2024–25, the UP govt procured coarse paddy at Rs 2,300 per quintal, but Basmati fetched up to Rs 5,500, offering farmers a potential additional profit of Rs 90,000 per hectare," said Manjit Singh Sandhu, a farmer from Bela Pokhra cultivating both varieties. SS Dhaka, plant physiologist at Krishi Vigyan Kendra, said, "The Terai region's nighttime temperatures of 20–24°C and high monsoon humidity make Pilibhit ideal for Basmati's vegetative growth." To support marginal Basmati producers, farmer producer organisations (FPOs) will be set up under the state's export promotion policy, linking local farmers directly with exporter groups.
