Gas cylinder will be expensive! Subsidy will also be affected! People’s concern increased due to this report…

New Delhi. The impact of the ongoing geopolitical tension in West Asia is now directly visible on the pockets of common people and companies of India. According to rating agency ICRA, if the current situation continues like this, then the under-recovery i.e. loss on LPG can reach around ₹ 80,000 crore by the financial year 2027.

Under-recovery means that the price at which oil companies are selling gas cylinders is less than its actual cost and they themselves have to bear the difference. This is having a direct impact on the earnings and profits of oil marketing companies (OMCs).

In fact, crude oil prices remain quite high globally, while petrol and diesel prices in India have been kept stable. This has increased the pressure on the margins of companies. It is estimated that if crude oil remains around $120-125 per barrel, there could be a loss of about ₹14 per liter on petrol and up to ₹18 per liter on diesel. Apart from this, due to disruptions in the supply of LPG from West Asia, gas prices have also increased rapidly in the international market.

Although India has balanced the supply to some extent by increasing LPG imports from countries like America and Australia, still the losses of the companies are not being reduced. Its impact is not limited to the gas sector only, but many sectors like fertilizer, chemical and city gas distribution are also being affected by it. Especially in the fertilizer industry, the cost of production has increased significantly due to the increase in prices of raw materials like ammonia and sulphur.

For this reason, the subsidy burden on the government is also likely to increase. ICRA estimates that fertilizer subsidy could reach ₹2.05 lakh crore to ₹2.25 lakh crore in FY2027, which is much higher than the current budget. At the same time, there will be pressure on the margins of companies due to increase in costs in the chemical and polymer sectors, although some specialty chemical companies may remain relatively safe.

Rising energy prices and uncertainty in supply may impact the earnings of many sectors in the future. Although the government and companies are trying to handle the situation, if the situation does not improve soon, its impact may reach the common consumer as well.