The government on Tuesday limited the supply of natural gas, giving priority to households receiving piped gas, vehicles running on compressed natural gas (CNG) and units producing cooking gas (LPG), as conflict in West Asia has disrupted liquefied natural gas (LNG) shipments. Strait of Hormuz.
“The ongoing conflict in the Middle East has resulted in disruption of liquefied natural gas shipments through the Strait of Hormuz,” the Ministry of Petroleum and Natural Gas said in an order. He said the new rules will “ensure equitable distribution and continuous availability for priority sectors”.
The ministry on Monday night notified the implementation of the Natural Gas (Supply Regulation) Order, 2026. Essential Commodities Act (ESMA) of 1955. – Giving the Directive overriding authority over all existing gas sales agreements and commercial arrangements.
The order establishes a four-tier priority system for gas allocation, with supply reduced to lower-priority sectors, including petrochemical plants, power stations and oil refineries, to meet essential demand.
According to people familiar with the matter, the Prime Minister… Narendra Modi met the petroleum minister Hardeep Singh Puri and External Affairs Minister S Jaishankar ahead of the meeting of the Cabinet and the Cabinet Committee on Economic Affairs (CCEA) on Tuesday. A person with knowledge of the matter said Cabinet members were briefed about the supply situation during their meeting and were told there was no need to panic.
The Cabinet was informed that the LPG supply issues are expected to be resolved within a day or two and instructions are being issued, this person said, adding that Union Home Minister Amit Shah and Finance Minister Nirmala Sitharaman are in touch on the matter.
But even as the government moved to protect domestic supplies, import cuts were already impacting commercial consumers. Restaurants in several cities reported running out of cooking gas, industry bodies warned of mass closures affecting hundreds of thousands of establishments and the chief minister of at least one state wrote to the Center seeking immediate intervention.
According to the Petroleum Planning and Analysis Cell (PPAC), India’s total gas consumption in 2024-25 was about 71.3 billion cubic meters (bcm) with 50.1% import dependence. According to experts, about one-third of total LNG imports have been disrupted due to the West Asia conflict. India’s remaining LNG imports come from the US, Russia and Australia.
India imports natural gas in liquefied form in the form of LNG, which once re-gasified supplies it to the pipeline network that supplies PNG to homes and CNG to vehicles. LPG – the cooking gas used by homes and commercial establishments – is a separate product, but its domestic production partly depends on natural gas processing, meaning a disruption in LNG imports impacts both supply chains.
“We have taken steps to ensure that 100% supply of CNG and PNG is ensured to domestic consumers and that other industries continue to get 70-80% of their supply despite the war situation. We are committed to ensuring uninterrupted supply of affordable energy to our domestic consumers. There is no shortage for domestic consumers and there is no reason to panic,” Puri said in a post on X on Tuesday.
The order said that under the first tier, gas requirements for domestic PNG, CNG for transportation, production of LPG, pipeline compressor fuel and other essential pipeline operations will be fully met based on the average consumption in the last six months.
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Fertilizer plants have been placed in the second tier, with the allocation maintained at 70% of their six-month average consumption. Natural gas is both the fuel and feedstock for fertilizer production, and the order specifies that the allocated gas “shall not use the gas supply for any other purpose” except fertilizer production. The units will have to submit a certificate to this effect to PPAC.
The third tier comprises other manufacturing and industrial consumers, including the tea industry, supplied through the national gas grid, which remains at 80% of their average consumption. Industrial and commercial consumers supplied through city gas distribution (CGD) networks are at the fourth level, also at 80%.
To meet priority-sector demand, gas supply from petrochemical facilities will be reduced completely or partially – including ONGC Petro Addition Ltd, GAIL Pata Petrochemical Complex, and Reliance Industries’ O2C (oil to chemicals) business as well as power plants. Oil refineries will have to absorb a cut of about 65% of their consumption over the past six months.
Gas Authority of India Limited (GAIL), in coordination with PPAC, will manage the supply and diversion. A combined price for diverted gas will be notified by PPAC; Priority entities must accept this price, cannot initiate litigation over it, and are barred from reselling the diverted gas.
India’s largest private refiner Reliance Industries Ltd (RIL) on Tuesday said it will maximize LPG production from its refining and petrochemical complex in Jamnagar, with teams working around the clock to optimize refinery operations and increase LPG production so that supply to the domestic market remains stable and reliable.
“At a time when global energy markets are facing volatility, ensuring uninterrupted access to essential fuels for Indian households remains a national priority. Reliance Industries is taking proactive steps in line with government guidelines,” it said in a statement.
It also said that natural gas produced from the RIL-operated KG-D6 basin will be diverted to support supply to priority sectors in line with national energy priorities and government guidelines.
Restaurants in many cities have started reducing operations or closing down due to reduced commercial LPG supply, with some establishments reporting that they had received barely 20% of their normal cylinder deliveries on March 9 before the supply was completely cut off.
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“The supply problem started on March 9. Most hotels received barely about 20% of their normal cylinder deliveries, and since then supplies have stopped completely. Distributors themselves are not getting the cylinders, so restaurants have been effectively cut off,” said Arun Adiga, managing partner of Vidyarthi Bhavan, an almost eight-decade-old Bengaluru restaurant.
Narendra Somani, president of Federation of All India Caterers and president of Hotel and Restaurant Association of Gujarat, said that 20% of the eateries in Gujarat may close if the suspension continues. “In areas like Manek Chowk and Law Garden, where many roadside shops run on LPG cylinders, they are likely to be closed from today as they will run out of gas supply,” he said.
National Restaurant Association of India has written to the Petroleum Minister demanding continued supply of commercial LPG cylinders, warning that the disruption will affect a sector representing more than 500,000 restaurants and providing employment to more than eight million people.
Karnataka Chief Minister Siddaramaiah on Tuesday wrote to Puri, urging his intervention, saying, “Many hotel and restaurant associations in the city have reported that they are unable to purchase commercial LPG cylinders, and many establishments are expressing concern that they may have to temporarily close operations if the supply is not restored soon.”
A communication issued by the All India LPG Distributors Federation on March 9 said the supply of commercial LPG cylinders to non-essential establishments, including hotels and restaurants, has been temporarily suspended due to the geopolitical situation.
State-run oil marketing companies have prioritized domestic LPG supply to households and introduced a minimum gap of 25 days between subsidized refills – extended from 21 days – to curb hoarding and black marketing, Reuters reports. The government also increased the prices of LPG for the first time in a year on Saturday.
(With inputs from HTC in Bengaluru and Ahmedabad)
