Commercial LPG supply up to 70%, focus on steel, auto, textiles, chemicals

The increase in domestic production of the fuel, along with increasing imports of LPG from regions other than West Asia, are being seen as the key reasons for the increased allocation of commercial LPG.

The Centre had earlier allowed 20 per cent allocation of commercial LPG, and then offered an additional 10 per cent if States took certain measures to help expedite PNG (piped natural gas) infrastructure. On March 21, it raised the commercial LPG allocation by another 20 per cent, specifically for restaurants, dhabas, hotels, industrial canteens, food processing and dairy sectors, subsidised canteens or food outlets run by state governments and local bodies, community kitchens, and commercial cylinders used by migrant labourers. It also made it mandatory for commercial and industrial consumers of LPG to register with public sector fuel retailers, and apply for a PNG connection. That condition continues to be in place for the additional 20 per cent allocation announced on Friday. The only exceptions will be industries where LPG is used for special processes or purposes, and cannot be replaced by natural gas.

Following the disruption of LPG supplies due to the closure of the Strait of Hormuz amid the West Asia war, supply to commercial and industrial consumers was cut in a bid to prioritise households that use LPG as kitchen fuel. India depends on imports to meet about 60 per cent of its LPG demand, with 90 per cent of its LPG imports coming from West Asia through the Strait of Hormuz.

The government also ordered refiners to maximise LPG production, and directed them to divert propane, butane and other streams from petrochemical manufacturing to LPG production. These measures have helped raise domestic LPG production by around 40 per cent vis-à-vis the pre-war levels, which translates to around 16 per cent of the country’s overall LPG demand.

The government has also been appealing to LPG consumers — commercial and industrial users as well as households — to shift to PNG, wherever feasible. Although natural gas supplies to India have also been hit, the situation is not as concerning as in the case of LPG. India depends on imports to meet roughly half of its natural gas needs, with 55-60 per cent of the imports coming through the Strait.

On Thursday, the government said that there was no LPG shortage for households, and the supply situation was improving with increased domestic production, along with additional LPG cargoes coming in from non-West Asian suppliers. It said that around one month of LPG supply was “firmly arranged” through imports from non-West Asian suppliers, and additional procurement was being tied up on a continuous basis.

The government said that domestic production was now meeting over 60% of India’s current daily requirement of 80,000 tonnes, which is predominantly household demand. The average daily LPG demand in the country was around 90,000 tonnes, but with commercial LPG supplies heavily curtailed, the daily requirement has fallen.

“The net daily import requirement has consequently come down to only 30 TMT (thousand metric tonnes) — meaning India is now producing much more than it needs to import. Over and above domestic production, 800 TMT of assured inbound LPG cargoes are already secured and en route from the United States, Russia, Australia, and other countries… Approximately one full month of supply is firmly arranged, with additional procurement being finalised continuously,” the Petroleum Ministry said Thursday.