Modi Government Enacts New LPG Supply Measures Amid Global Disruptions
India's Modi-led government has enacted the Essential Commodities Act (ESMA) to tackle LPG supply shortages by prioritizing certain sectors and directing domestic production increases.
Highlights
- •The Essential Commodities Act (ESMA) has been introduced by Modi-led central government to boost LPG production.
- •Priority has been given to natural gas supply for sectors like fertilizer and tea manufacturing.
- •Oil companies have been instructed to limit their gas consumption and increase LPG production to avoid shortages.
- •Imports of LPG, with a significant portion sourced from countries reliant on the Strait of Hormuz, have been impacted by conflicts.
The central government led by Narendra Modi has just introduced the Essential Commodities Act (ESMA) to regulate the supply of natural gas, aiming to boost LPG production and address supply chain issues in the nation.
According to the government notification, the directive prioritizes the supply of domestic PNG, CNG for transportation, LPG production, and other essential pipeline operational needs for compressor fuel. Consumers in Sector 1 will receive a gas supply matching the average of the previous six months.
On the other hand, supply to other sectors will be reduced. Fertilizer plants in Sector 2 will receive up to 70 percent of the previous six-month average, with the supply stipulated for specific purposes. The tea industry under Sector 3 is allowed to use up to 80 percent of the previous six-month average for their operations. City gas distributors have been tasked with ensuring these supplies.
Petrochemical and power plants will also see reduced gas supplies. 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 been instructed 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, with only 12.8 million tonnes produced domestically. The majority of India's imports (85-90 percent) come from countries like Saudi Arabia, which are dependent on the critical Strait of Hormuz for transit. The sea route has been closed due to a conflict between Iran and the US-Israel.
