NEW DELHI: The government has announced Rs 11,925.01 crore for the total LPG subsidy in the interim budget for 2024. It will pay Rs 1500 crore to Oil Marketing Companies (OMCs) for direct benefit transfer under the PAHAL Direct Benefit Transfer (DBT) Scheme, where oil companies such as Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Limited Corporation Limited (HPCL), or Bharat Petroleum Corporation Limited (BPCL) provide LPG cash subsidies directly to consumers.
Additionally, Rs 9094 crore has been allocated for providing LPG connections to poor households, aiming to support BPL households in transitioning to cleaner fuel options.
The government has allocated Rs 1200 crore for subsidising the sale of natural gas under the administered price mechanism (APM) in north-eastern states for FY25. However, experts are concerned that Rs. 1500 crore may be inadequate if international crude oil or LPG prices rise and for companies' energy transition.
Prashant Vashisht, Vice President and Co-Head at ICRA, expressed that while the budgetary allocation for DBT seems adequate at Rs 1500 crore, it may pose a risk for PSU OMCs if international crude oil or LPG prices increase. He also mentioned that the subsidy burden for 2024–25 might increase due to the raised subsidy under the Pradhan Mantri Ujjwala Yojana (PMUY). The budgetary allocation of Rs 9094 crore for LPG connections for poor households might fall short against the actual outflow.
In the interim budget, the government will provide capital support of Rs. 15,000 crore to the oil marketing companies, which is almost half of the previous budget's allocation. Additionally, no budget has been allocated for the refill of the Indian Strategic Petroleum Reserve Limited (ISPRL) or an emergency fuel store. Currently, India stores a total of 5.33 MMT (million metric tonnes) or 36.92 million barrels (5.870 million cubic metres) of strategic crude oil, enough to provide 9.5 days of consumption.
Budget documents reveal an allocation of Rs 408 crore for the construction of the second phase of the Indian Strategic Petroleum Reserve Limited (ISPRL). Furthermore, Rs 220.4 crore has been allocated for the payment of operation and maintenance costs of caverns at Visakhapatnam, Mangalore, and Padur.