The price of a 14.2-kg domestic LPG cylinder in India has seen a significant increase, rising by 60 rupees across metropolitan cities. In Delhi, the new price is now 913 rupees, up from the previous 853 rupees. Other cities have also experienced similar hikes, with prices set at 912.50 rupees in Mumbai, 939 rupees in Kolkata, and 928.50 rupees in Chennai.

Additionally, the rates for commercial LPG gas cylinders have increased by 115 rupees. This surge in prices is attributed to ongoing geopolitical disruptions affecting fuel supply.

Impact on the Hospitality Sector

These price hikes and the shortage of commercial LPG cylinders are severely impacting the hospitality sector, particularly in major cities like Mumbai, Bengaluru, and Chennai. Reports indicate that at least 20 percent of hotels and restaurants in Mumbai have had to shut down temporarily due to the LPG cylinder shortage.

AHAR – the Indian Hotels and Restaurants Association – expressed concern, stating, “Despite being a basic operational requirement for restaurants and hotels, commercial cylinders are becoming increasingly difficult to obtain through proper channels.” This shortage is creating challenges for many establishments that rely on these cylinders for their daily operations.

Government Response

In response to the situation, the Indian government has increased the LPG booking period from 21 days to 25 days to help curb hoarding and ensure a more stable supply. Furthermore, the government has invoked the Essential Commodities Act to prioritize the allocation of natural gas, ensuring that supply is maintained at levels corresponding to the average consumption over the past six months.

Officials have indicated that the supply of natural gas must be treated as a priority, stating that it shall be maintained subject to operational availability. However, details remain unconfirmed regarding the exact impact of ongoing geopolitical conflicts on future gas cylinder prices.

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Government Directives

The Ministry of Petroleum and Natural Gas issued orders directing oil refineries and petrochemical units to maximize LPG production specifically for domestic use. This initiative aims to prioritize energy security for households across the country.

In addition, the government has classified natural gas supply to certain sectors as a priority allocation. Fertilizer plants are mandated to maintain seventy percent of their past six-month average gas consumption, while gas marketing entities must ensure eighty percent gas supply to tea industries and other industrial consumers.

City Gas Distribution entities are also required to provide eighty percent gas supply to industrial and commercial consumers. Conversely, oil refining companies have been ordered to reduce their gas allocation to approximately sixty-five percent of their past six-month gas consumption.

Measures to Prevent Hoarding

To prevent hoarding and black marketing, a 25-day inter-booking period has been introduced. This measure is designed to regulate the availability and equitable distribution of petroleum products and natural gas, ensuring that the needs of consumers are met without disruption.

Every producer, importer, transporter, marketer, or distributor of natural gas is now required to furnish information to the Central Government, further enhancing transparency in the supply chain.

Current Status

As of now, the government is actively monitoring the situation to ensure that domestic LPG supply remains stable. The invocation of the ESMA Act reflects the government’s commitment to safeguarding energy security for its citizens during challenging times.

Significance of the ESMA Act Invocation

This sequence of events is crucial for various stakeholders, including households relying on LPG for cooking and industries dependent on natural gas. The government’s proactive measures aim to mitigate the impact of external disruptions on domestic fuel supply, ensuring that essential services continue without interruption.

As the situation evolves, the government’s actions under the ESMA Act will play a vital role in maintaining stability in the energy sector.

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