LPG, CNG Crisis: The central government led by Narendra Modi has enacted the Essential Commodities Act (ESMA) concerning the supply of natural gas to boost the production of cooking gas (LPG) in the nation, responding to disruptions in the global supply chain. A notification has been released by the government regarding this matter. As per the notification, this directive aims to guarantee fair distribution and ongoing availability for priority sectors, especially considering the current conflict in West Asia.
What does this Act entail?
In accordance with the Natural Gas (Regulation of Supply) Order, 2026, issued by the Ministry of Petroleum and Natural Gas, the supply of domestic PNG (Piped Natural Gas), CNG for transportation, LPG production, and other essential pipeline operational needs for compressor fuel have been prioritized in Sector 1. These consumers will receive a gas supply that matches the average of the previous six months. Supply to other sectors will see a reduction.
Effects on the fertilizer and tea industries
Fertilizer plants have been given priority in Sector 2, receiving up to 70 percent of the previous six-month average, with the stipulation that this supply cannot be used for any other purposes. The tea industry, manufacturing facilities, and other industrial consumers fall under Sector 3, where they can utilize up to 80 percent of the previous six-month average. City gas distributors are tasked with ensuring this supply. Additionally, gas supplies to petrochemical and power plants will be either fully or partially reduced.
Order to increase domestic production of LPG
The government has directed all oil companies to increase domestic LPG production to avoid shortages for the general public. Natural gas supplies to other consumers will be cut and diverted to LPG production. Oil companies have also been directed to limit their gas consumption to 65 percent of the previous six months’ consumption.
India’s LPG consumption was estimated at 31.3 million tonnes in fiscal year 2024-25, of which only 12.8 million tonnes was produced domestically, while the rest was imported. 85-90 percent of India’s imports come from countries like Saudi Arabia, which rely on the crucial Strait of Hormuz for transit. This sea route has been closed due to the weeks-long conflict between Iran and the US-Israel.