Oil Marketing Companies (OMCs) and Under-Recovery Mechanism

India's three state-owned oil marketing companies — Indian Oil Corporation (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) — are responsible for retail pricing and distribution of LPG, petrol, and diesel. When global commodity prices rise and the government restrains retail price hikes for social or political reasons, OMCs absorb losses termed "under-recoveries." The government may compensate OMCs through budgetary support, but in recent years OMCs have frequently been asked to bear under-recoveries on their balance sheets, affecting profitability and capital expenditure capacity.