New Delhi, March 10 The Ministry of Oil has formed a committee to examine supply issues after a sudden shortage of commercial LPG cylinders alarmed the hospitality sector, with restaurant associations warning that eateries could shut down within days if supplies are not restored.
As the escalating conflict in the Middle East disrupted fuel supplies, including India's LPG, the government has prioritized domestic cooking gas supplies to households. This has led to a supply crunch for hotels and restaurants that use market-priced commercial LPG.
"To review representations for LPG supply to restaurants/hotels/other industries, a committee of three Executive Directors (EDs) of Oil Marketing Companies (OMCs) has been constituted," the ministry said in a post on X.
India consumes approximately 31.3 million tonnes of LPG annually. As much as 87 per cent of this is in the domestic sector, i.e., household kitchens, and the rest in commercial establishments such as hotels and restaurants.
Of this total requirement, as much as 62 per cent is met through imports. The US and Israel's attack on Iran and Tehran's retaliation have closed the Strait of Hormuz – the conduit through which India gets 85-90 per cent of its LPG imports from countries like Saudi Arabia.
As alternative sources are being explored, the limited supplies available have led the government to prioritize supplies to the domestic sector, and in the process, commercial establishments have suffered.
Industry sources say that the disruption has already begun affecting operations in Mumbai and Bengaluru, as hotels and restaurants struggle to secure cooking gas.
Vijay Shetty, president of the India Hotels and Restaurant Association, said that the shortage is spreading rapidly and could soon paralyze the sector.
While maintaining that the country has adequate fuel stocks, the ministry in recent days has directed refineries to maximize LPG output by curtailing petrochemical streams and has extended the LPG refill booking cycle to 25 days from 21 days.
"In light of current geopolitical disruptions to fuel supply and constraints on LPG supply, the ministry has issued orders to oil refineries for higher LPG production and for using such extra production for domestic LPG use," the ministry said in the post on X.
"The ministry has prioritized domestic LPG supply to households and introduced a 25-day inter-booking period to avoid hoarding/black marketing."
Non-domestic supplies from imported LPG are being prioritized to essential non-domestic sectors such as hospitals and educational institutions, it said.