2 weeks ago
OMC LPG under-recoveries to fall 40% as global prices ease
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.
State-run oil marketing companies' LPG under-recoveries are expected to decline by nearly 40% sequentially to around Rs 8,200 crore in Q2FY27.
The under-recovery burden reached Rs 13,700 crore in Q1FY27 after the West Asia conflict and Strait of Hormuz closure disrupted global LPG supplies.
The Saudi Contract Price surged nearly 50% to $785 per tonne in Q1FY27 from an average $530 per tonne in FY26, easing to $592 in July and $632 in August.
Under-recovery on domestic LPG is expected to fall from around Rs 500 per cylinder in Q1FY27 to Rs 300 in Q2, with the current Delhi price at Rs 942 per 14.2-kg cylinder.
India's LPG import dependence fell to around 35% from 60% as demand dropped and nearly two-thirds of imports now come from the US.
- Who
- State-run oil marketing companies (OMCs) in India, as assessed by CareEdge Ratings.
- What
- LPG under-recoveries are expected to fall by nearly 40% sequentially in Q2FY27 as international LPG prices soften.
- Where
- India, with domestic LPG prices referenced at the Delhi rate of Rs 942 per cylinder.
- When
- September quarter (Q2FY27), following a Rs 13,700 crore burden in Q1FY27.
- Why
- A decline in the Saudi Contract Price and easing global LPG sourcing costs after the West Asia supply shock.
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










