World Trade· August 17, 2026 at 06:16 a.m.
LPG Under-Recoveries Impact Profitability of OMCs Amid Global Supply Shocks
Key takeaways
- Indian Oil Corporation Limited reported an under-recovery of INR 14,000 crores for FY2021-2022
- BPCL and HPCL reported under-recoveries of INR 9,500 crores and INR 7,000 crores, respectively
Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) have reported a significant increase in under-recoveries on liquefied petroleum gas (LPG) sales, affecting their profitability. This development comes in the wake of global supply disruptions.
The under-recoveries, which are the difference between the cost of LPG and its selling price, have risen due to increased international prices of the commodity. As a result, the three state-owned oil marketing companies (OMCs) have incurred losses on their LPG sales.
In response to these developments, IOCL reported an under-recovery of INR 14,000 crores ($1.8 billion) for the financial year 2021-2022, while BPCL and HPCL reported under-recoveries of INR 9,500 crores ($1.2 billion) and INR 7,000 crores ($900 million), respectively.
The rise in under-recoveries is a concern for the OMCs as it erodes their profit margins. The global supply shocks have been attributed to factors such as geopolitical tensions and weather-related disruptions.
