2 weeks ago

OMC LPG under-recoveries to fall 40% as global prices ease

OMC LPG under-recoveries to fall 40% as global prices ease
OMCs’ LPG under-recoveries may fall 40% in Q2 as global prices ease · financialexpress.com

Companies in India that sell cooking gas buy much of it from other countries.

When the price they pay to buy gas goes up but the price they sell it for stays the same, they lose money.

That loss is called an under-recovery.

A conflict in West Asia made gas prices jump, so these companies lost a lot of money.

Now gas prices around the world are going down again.

Because of that, the companies expect their losses to shrink by about 40% in the next three months.

A key gas price called the Saudi Contract Price went up a lot but has now come down.

India also started buying more gas from the United States instead of West Asia.

People used less cooking gas between March and June, which also helped reduce losses.

Even so, the companies still carry big losses from before, so their profits will stay under pressure.

Key facts

Q1FY27 LPG under-recovery
Rs 13,700 crore
Expected Q2FY27 under-recovery
Around Rs 8,200 crore (40% lower)
Cumulative under-recovery as of June 30
Rs 61,900 crore (up from Rs 48,200 crore at end of March)
Saudi Contract Price Q1FY27
$785 per tonne, up ~50% from $530 average in FY26
Saudi Contract Price August
$632 per tonne (after $592 in July)
Under-recovery per domestic cylinder
Rs 300 in Q2FY27, down from Rs 500 in Q1FY27
Delhi domestic LPG price
Rs 942 per 14.2-kg cylinder
LPG import dependence
Fell to ~35% from 60%; ~two-thirds of imports now from the US

Quotes

Richa Bagaria

Associate Director, CareEdge Ratings

“The subsequent reduction in LPG sourcing cost on the back of a decline in Saudi CP is expected to moderate LPG under‑recoveries by ~40% q-o-q in Q2FY27,”
financialexpress.com

Sources

Related news