Government invokes Essential Commodities Act to ensure uninterrupted LPG supply
What's the story
The central government has invoked the Essential Commodities Act, 1955, to regulate the availability, supply and equitable distribution of petroleum and petroleum products and natural gas. The decision was taken in light of possible shortages due to ongoing unrest in the Middle East. Per available data, India consumed 31.3 million tons of LPG during FY2024-25, with only 12.8 million tons produced domestically.
India
One-fifth of world's crude oil passes through Strait of Hormuz
The majority of India's LPG requirements are met through imports, with 85-90% coming from countries like Saudi Arabia. These shipments pass through the Strait of Hormuz, which has been effectively blocked due to escalating tensions among the United States, Israel and Iran. Roughly one-fifth of the world's crude oil passes through the strait. However, this covers significant regional and country variances; although the Americas import 12.5% of their oil across the strait, China imports 45.7%, according to data agency Kpler.
Order
What order says
The order issued under the Essential Commodities Act mandates all public and private refiners to divert their propane and butane streams entirely for LPG production. This LPG must be supplied only to three public-sector oil marketing companies: Indian Oil Corporation, Bharat Petroleum Corporation Ltd, and Hindustan Petroleum Corporation Ltd. The act prohibits using these streams for petrochemical manufacturing and mandates that produced LPG be sold only to households for cooking purposes.
Twitter Post
Read order here
Government of India invokes the Essential Commodities Act, 1955, to regulate the availability, supply and equitable distribution of petroleum and petroleum products and natural gas pic.twitter.com/OqtsDwb13s
— ANI (@ANI) March 10, 2026
Distribution plan
Priority allocation for essential sectors
The order seeks to ensure equitable distribution of natural gas after disruptions in LNG shipments. It has laid down a priority allocation plan for essential sectors, including domestic piped natural gas (PNG), compressed natural gas (CNG) for transport, LPG production and essential pipeline operational needs. Priority Sector I will maintain 100% of average consumption over the past six months for these sectors, subject to operational availability.
Supply reduction
Fertilizer plants, tea manufacturing and city gas distribution networks
Fertilizer plants fall under Priority Sector II and will get at least 70% of their average consumption over the past six months. However, this gas must be used strictly for fertilizer production. Industries such as tea manufacturing under Priority Sector III will get about 80% of their average consumption over the previous six months. Industrial and commercial consumers through City Gas Distribution networks fall under Priority Sector IV and will receive around 80% of past average consumption, subject to availability.
Supply curtailment
Petrochemical units, power plants and oil refineries to face reductions
The order also provides for curtailment of gas supply to non-priority sectors. Petrochemical units will be the first to face reductions in their gas supply, followed by power plants if required. Oil refineries will also see a reduction in their gas consumption, which will be brought down to about 65% of average consumption over the previous six months, depending on operational feasibility.
Coordination
GAIL to manage supply diversion, submit invoice prices
The implementation of the order will be coordinated by the Gas Authority of India Limited (GAIL) in consultation with the Petroleum Planning and Analysis Cell (PPAC). GAIL will manage supply diversion and submit invoice prices for diverted gas volumes to PPAC. The government has directed all stakeholders involved in natural gas production, import, marketing and transportation to comply with revised supply schedules and allocation mechanisms immediately.