HPCL Reports Rise in LPG Under-Recoveries as Refinery Debt Restructuring Progresses

State-run Hindustan Petroleum Corporation (HPCL) has reported that under-recoveries on liquefied petroleum gas (LPG) rose by nearly 34 percent on a monthly basis, reaching ₹327 per 14.2 kg domestic cylinder in November 2026. According to HPCL Chairman Vikas Kaushal, speaking during a post-result analyst call, these figures compare to ₹245 per cylinder recorded in October.

The company's total under-recovery for the second quarter of fiscal year 2027 stood at roughly ₹18,049 crore, resulting from the sale of LPG to consumers below prevailing market rates. Previous figures showed under-recoveries of ₹12,798.67 crore as of March 31, 2026, and ₹14,240.64 crore as of September 30, 2025.

Across the broader industry, under-recovery per cylinder fluctuated significantly over recent months. It was recorded at around ₹721 in June, dropped to roughly ₹500 a month later, fell further to ₹188 in August, and rose again to about ₹210 in September. Consequently, the cumulative under-recovery of public sector oil marketing companies—including Indian Oil Corporation, HPCL, and Bharat Petroleum Corporation—climbed from approximately ₹51,000 crore in June to over ₹62,000 crore in August 2026.

Higher freight rates further contributed to operational costs. HPCL management noted that freight rates nearly doubled between the first and second quarters of FY27. Brokerage firm Equirus Securities pointed out that US LPG, linked to Mont Belvieu prices at $0.68 per gallon in August 2026 (equivalent to about $360 per tonne), typically benchmarks lower than Saudi CP, but longer voyage distances to India increase its delivered cost. Furthermore, Houston–Asia Very Large Gas Carrier freight exceeded the $200 per tonne mark in mid-April 2026 and climbed past $300 by August due to stronger eastbound demand and constrained vessel availability.

Amid these margin pressures, Kaushal highlighted a significant corporate development regarding the HPCL Rajasthan Refinery (HRRL) in Barmer, Rajasthan. The company successfully refinanced the entire loan of ₹45,000 to ₹50,000 crore for the facility. Agreements were finalized at the end of September and took effect on October 3.

The debt restructuring is expected to lower interest rates by approximately 105 basis points compared to the original rates. This change is projected to generate an annual savings of ₹470 to ₹500 crore, with benefits accruing immediately from October 3.

Kaushal added that HPCL anticipates making additional equity calls over the next one or two quarters to further reduce the total debt burden. On a comparable basis, the company projects a reduction in its annual interest burden by roughly ₹1,000 crore, marking an improvement over the previous year.

"The financial trajectory of public sector energy enterprises like HPCL illustrates the constant balancing act between regulated consumer pricing and global commodity volatility. While rising LPG under-recoveries present ongoing margin challenges, proactive capital management—such as the substantial refinancing of the Rajasthan refinery debt—demonstrates a strong focus on cost optimization. For businesses and industrial stakeholders, navigating macroeconomic cost pressures requires a disciplined approach to debt restructuring and operational efficiency to protect long-term financial health." — Dr. Shishir Gupta, Founder & CEO, StartupLanes