Govt orders to increase LPG production; PNG and CNG Supply Will Not Stop

LPG Supply: To guarantee a steady supply of domestic cooking gas, the government has activated the Essential Commodities Act (ECA). This directive mandates that refineries and petrochemical facilities increase their production of liquefied petroleum gas (LPG) and redirect crucial hydrocarbon streams to the LPG pool.

As per the directive released by the Ministry of Petroleum and Natural Gas late Monday evening, refineries are required to channel the entire output of C3 and C4 streams, which encompass propane, butane, propylene, and butene, towards LPG production. This measure aims to ensure a continuous supply of cooking gas to domestic users, thus giving precedence to cooking gas over petrochemical manufacturing.

What changes will occur?

According to the order, these streams must be allocated solely to three state-owned oil marketing firms – Indian Oil Corporation, Bharat Petroleum Corporation, and Hindustan Petroleum Corporation – which collectively handle nearly all domestic LPG distribution in the nation.

Additionally, the ministry has barred refineries and petrochemical plants from redirecting these streams for petrochemical production or any other downstream applications, to prioritize the supply of domestic LPG. The order emphasizes that LPG is a vital domestic fuel, widely utilized in households throughout India, and ensuring its consistent availability is crucial for the public good.

Oil marketing companies have also been instructed to guarantee that the LPG obtained through this arrangement is exclusively supplied to domestic consumers. The ministry indicated that this new directive will supersede the previous order issued on March 5 and will remain effective until further notice.

What is ECA?

The Essential Commodities Act, 1955 (ECA) has been the government’s way of controlling rising food prices, preventing hoarding and maintaining food security over the years. In 2020, Parliament amended the Act to limit the central government’s powers to regulate cereals, pulses, potatoes, onions, edible oilseeds, and oils to specific circumstances, such as war, famine, extreme price increases, and severe natural calamities.

It also stipulated that stock limits for agricultural produce would only be regulated if there was a 100% increase in the retail price of horticultural produce or a 50% increase in the retail price of non-perishable agricultural food items. However, the Centre has since invoked the ECA five times, imposing stock limits on exports of cereals and wheat, and sugar, citing the need to control food prices and meet domestic needs.