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Informist, Wednesday, Mar. 18, 2026

 

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--Govt: Domestic LPG production up 40% since Mar 5 
--CONTEXT: Govt briefing media on West Asia conflict 
--Govt: No dry-outs reported at LPG, diesel, petrol retail outlets 
--Govt: To allocate 10% more commercial LPG to states if they aid shift to PNG 
--Govt: LPG supply situation still uncertain 
--Govt: Urge all consumers to avoid panic-booking of LPG, shift to other fuels 
--Govt: Continuously monitoring ship movement, ports, maritime trade 
--Govt: Have sufficient stocks of ATF; no airfare price hike reported 
--Govt: Crude procurement prices up but no hike in petrol, diesel prices yet 
--Govt: Have sufficient crude inventories 
--Govt: Refineries operating at maximum capacity

 

NEW DELHI – In a bid to facilitate a quicker shift to piped natural gas from liquefied petroleum gas, the Centre has incentivised states with an additional 10% allocation of commercial LPG if they help customers transition from LPG to PNG for the long run. According to a letter issued to states Wednesday, the Centre has set additional commercial LPG allocation quota for states to manage the severe crunch in the availability of cooking fuel in the wake of the West Asia conflict.

 

The Centre had cut the overall allocation for commercial LPG to 20% to keep the domestic supply undisturbed. The cut in commercial LPG affected the food and beverages sector, and since Sunday, the government has allowed the sale of commercial LPG cylinders as well, albeit in a staggered manner. The government is pushing for more consumers to shift to PNG from LPG, and on Monday, it had asked state governments and Union Territories to approve applications seeking permission for PNG connection within 24 hours. 

 

As per the latest order issued Wednesday, the Centre will allow 1?ditional allocation of commercial LPG to states if they form state- and district-level committees to swiftly approve requests for piped gas. Another 2% will be allocated for issuing an order granting deemed piped gas permission, followed by another 3% for introducing the 'dig and restore scheme' for piped gas, and 4% of additional commercial LPG for reducing the annual rental or lease charges for city gas distributors. The 'dig and restore scheme' is aimed at giving relief to consumers by waiving the cost of digging required for PNG connection, and then restoring it. 

 

"In the current LPG shortage scenario due to Middle East crisis, OMCs (oil marketing companies) are providing 20% commercial LPG for states. It would be a smart move at this stage for States to enable transition of LPG consumers to PNG," the letter addressing state chief secretaries said. "Therefore, it is proposed that even while LPG for commercial is in short supply, its allocation to be increased to 30% provided States can help in long-term transition to PNG."

 

The Centre's directive to state governments comes amid disruptions to cooking gas imports due to the closure of the Strait of Hormuz. LPG remains the primary cooking fuel for millions of households, and any disruption quickly affects its availability. India imports about 60% of its overall cooking gas requirements. Of this, around 90% is routed through the Strait of Hormuz. 

 

Amid the serious supply disruption, the government has taken various measures to boost LPG production, including asking oil marketing companies to use propane and butane solely for LPG production and restricting petrochemical production. These measures have yielded significant results, Sujata Sharma, joint secretary in the petroleum and natural gas ministry, said Wednesday, with domestic LPG production increasing 40% from the levels on Mar. 5. Sharma, while briefing the media on West Asia conflict, reiterated that consumers must avoid panic-booking of LPG cylinders and shift to alternate sources of fuel like kerosene to mitigate the LPG shortage. While supplies remain uncertain, no dry-outs have been reported at retail LPG outlets or distributorships, she said. 

 

India faces supply constraints after Israel and the US launched joint military strikes on Iran on Feb. 28, prompting Tehran to hit back at Israel and at US military installations in the Persian Gulf. Iran also shut the Strait of Hormuz, a narrow waterway that connects the Gulf to the Arabian Sea and the Indian Ocean, resulting in a sharp rise in crude oil and natural gas prices.

 

A fifth of global crude oil supply flows through the Strait of Hormuz. About half of India's crude oil imports--primarily from Iraq, Saudi Arabia, the United Arab Emirates, and Kuwait--also pass through the strait, making the country particularly vulnerable to shipping bottlenecks there and to surging freight and insurance cost.

 

With rising, and more importantly, prolonged tension in the West Asia, Brent crude oil price touched $119.50 per barrel on Mar. 9, the highest since June 2022. India had last raised petrol and diesel prices in October 2024, a marginal 5 paise increase, and kept them stable despite the fluctuations seen in global prices. According to Sharma, while India's crude procurement prices have gone up, there is no rise in petrol or diesel prices, with no dry-outs in retail outlets reported as well. Even in the past, oil marketing companies like Indian Oil Corp. Ltd. and Hindustan Petroleum Corp. Ltd. have absorbed the hit from higher global crude oil prices by not raising the retail price domestically.

 

There have also been concerns in some quarters about a likely rise in airfares due to the sharp increase in fuel prices. According to Sharma, India has sufficient crude inventories with refineries operating at maximum capacity. India produces aviation turbine fuel and is also an exporter of it. "We have sufficient stocks of ATF...no airfare price hike reported," she said. 

The government is also continuously monitoring vessel movement and port security to ensure maritime trade continues, Rajesh Kumar Sinha, special secretary in the Ministry of Ports, Shipping and Waterways, who was also present at the briefing, said.  End

 

US$1 = INR 92.63

 

Reported by Priyasmita Dutta and Shweta

Edited by Akul Nishant Akhoury

 

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