Managing the LPG Crisis, How Government Measures Are Easing the Impact of the West Asia War
As the Conflict Disrupts 54% of India’s LPG Supplies, Enhanced Refinery Output, Prioritised Household Allocation, and a Push for PNG Connections Are Helping Navigate the Crisis
Even as the West Asia war has created a serious energy crisis across the world, measures taken by the Centre such as enhanced refinery output, extended LPG booking intervals, prioritisation of household consumers, and promotion of alternative fuels have contributed significantly in managing the LPG crisis so far, Minister for Information & Broadcasting Ashwini Vaishnaw said on Tuesday.
The war, which has effectively halted vessel movements through the Strait of Hormuz, has hit India’s energy supplies hard. Around 54 per cent of India’s LPG supplies are effectively disrupted, forcing the government to take drastic measures to ensure that households—the most vulnerable users—continue to have access to cooking fuel.
Separately, the Petroleum Ministry said that while LPG supply to the country has been hit due to the war—given India’s high dependence on West Asia for the fuel—a number of cargoes have been lined up to augment supplies. The situation remains fluid, but the government’s proactive measures have helped stabilise the market and prevent a full-blown crisis.
The Scale of the Disruption
India’s annual LPG consumption is around 33 million tonnes, with domestic production accounting for about 13 million tonnes. The remaining 20 million tonnes are imported, with over 90 per cent of those imports coming through the Strait of Hormuz. When the strait was effectively closed following the outbreak of war, India lost access to the majority of its LPG supply.
The closure of the strait was not a gradual process. It happened suddenly, catching both governments and markets off guard. Vessel movements halted. Cargoes already at sea were diverted. Insurance premiums soared. The supply chain that had functioned smoothly for decades was abruptly severed.
The government’s response was swift and multi-pronged. It had to balance the need to maintain supplies to households with the reality of reduced availability. The choices were difficult, but the execution has been effective.
Boosting Domestic Production
Apart from prioritising LPG supplies to households over commercial and industrial consumers, the government ordered refineries to maximise LPG production and directed them to divert propane, butane, and other streams from petrochemical manufacturing to LPG production. These measures have led to an increase of 40 per cent in domestic LPG production vis-à-vis pre-West Asia conflict levels.
This is a significant achievement. Refineries are complex systems designed to produce a mix of products—petrol, diesel, jet fuel, petrochemical feedstocks, and LPG. Shifting that mix to prioritise LPG requires adjustments to operating parameters, changes in feedstock, and sometimes even modifications to equipment. The fact that domestic production has increased by 40 per cent demonstrates both the flexibility of India’s refining system and the urgency of the government’s response.
The increase in domestic production has been critical. While it cannot fully replace the lost imports—the gap is too large—it has provided a cushion that has prevented a complete collapse of supplies. Every additional cylinder produced domestically is a cylinder that does not need to be imported.
Managing Demand
The Centre has also increased waiting times between cylinder bookings by households from 21 days to 25 days in urban areas and 45 days in rural areas to check hoarding. This is a demand management measure, designed to smooth out the peaks and troughs in consumption that can strain supply chains.
When a crisis hits, there is often a surge in panic buying. Households that normally order a cylinder every three weeks may order one every week, fearing that supplies will run out. This panic buying creates a spike in demand that is unrelated to actual consumption, putting additional pressure on already strained supplies.
By extending the waiting period, the government has discouraged panic buying. Households know that they cannot order more frequently than the allowed interval, so they adjust their consumption accordingly. The result has been a stabilisation of demand.
Data shows that panic bookings for LPG cylinders by households have reduced, with daily booking levels now around the pre-conflict average of 55.7 lakh cylinders a day. Vaishnaw said the average daily demand had come down to 55 lakh per day (as on March 19) from a peak of 89 lakh that it hit on March 13. This reduction of nearly 40 per cent in daily bookings is a clear indication that the demand management measures are working.
Alternative Fuels for Commercial Consumers
The government has also activated alternative fuel streams like kerosene, fuel oil, biomass, and even coal for commercial consumers. This is a pragmatic response to the reality that there is not enough LPG to go around. By redirecting alternative fuels to commercial users, the government has been able to reserve LPG for households.
Commercial consumers—restaurants, hotels, hostels, small businesses—have been hit hard by the supply cuts. Many have had to reduce operations or switch to alternative fuels that are less efficient or more polluting. But the alternative would have been to cut supplies to households, which would have had even more severe social and political consequences.
The government’s decision to prioritise households over commercial users is defensible on equity grounds. Households have fewer alternatives. A restaurant can switch to kerosene or biomass; a family cannot. A hotel can adjust its operations; a household cannot.
The Push for PNG
The government has also appealed to consumers to switch to piped natural gas (PNG), if available in their vicinity, to take some pressure off LPG supplies. Some city gas distribution (CGD) companies have also announced incentives like some volumes of free gas and waiver of connection charges to encourage consumers to sign up for PNG connections.
PNG is a more efficient and cleaner fuel than LPG, but it requires pipeline infrastructure that is not yet available everywhere. In areas where pipelines exist, however, PNG offers a viable alternative that can reduce dependence on LPG.
The Centre has also urged states to help expedite PNG network expansion. This is a longer-term measure, but it has immediate benefits as well. Every household that switches to PNG reduces the demand for LPG, freeing up supplies for others.
Vaishnaw said in the first three weeks of March, CGD companies have activated over 3.5 lakh PNG connections—domestic as well as commercial—and can activate another 15 lakh over the next 10 days. “This should further reduce the average demand for domestic LPG and it should come down to around 50 lakh cylinders a day,” Vaishnaw said.
The Petroleum and Natural Gas Regulatory Board has directed CGD entities to prioritise PNG connections for residential schools, colleges, hostels, and community kitchens within five days where pipelines are available, Petroleum Ministry Joint Secretary Sujata Sharma said Tuesday. This targeted approach ensures that the most vulnerable institutions—where many people depend on a single kitchen—get priority access.
Strengthening Consumer-Centric Service Delivery
The government on Tuesday introduced measures to strengthen consumer-centric gas service delivery while ensuring that the transition to PNG does not impose an excessive financial burden on users. The framework mandates time-bound provision of PNG connections, aiming to improve service standards and facilitate a gradual shift from LPG in areas with existing pipeline infrastructure.
It also allows flexibility in regions where connectivity remains technically unfeasible. To safeguard public interest, the policy seeks to prevent arbitrary denial of access for pipeline development by local authorities or private entities. It further establishes a transparent dispute resolution mechanism through designated authorities, balancing consumer convenience with national priorities, such as energy security and clean energy transition.
The Bigger Picture
The government’s management of the LPG crisis offers lessons for how to handle supply disruptions more broadly. The combination of supply-side measures (boosting domestic production), demand-side measures (extending waiting periods), and fuel substitution (promoting PNG and alternative fuels) has created a multi-layered response that has prevented a full-blown crisis.
The crisis also highlights the importance of energy diversification. India’s dependence on imports—and on a single chokepoint for those imports—is a vulnerability that needs to be addressed over the long term. While the immediate crisis is being managed, the underlying vulnerability remains.
The government’s push for PNG is part of a longer-term strategy to reduce dependence on imported LPG. PNG, once the pipeline infrastructure is in place, is a more secure and stable source of energy. It is also cleaner, which aligns with India’s climate goals.
Conclusion: A Crisis Managed, Not Resolved
The government’s measures have successfully managed the LPG crisis so far. Daily demand has been reduced from its peak, domestic production has increased, and PNG connections are being rolled out at an accelerated pace. But the crisis is not over. The war continues, the strait remains closed, and imports are still disrupted.
The next few weeks will be critical. The government has lined up cargoes to augment supplies, but these cargoes must navigate the strait or find alternative routes. The insurance situation remains uncertain. The global market for LPG is tight, and prices are high.
The government’s response has been effective, but it cannot solve the underlying problem. That will require a long-term strategy of diversification, domestic production enhancement, and fuel substitution. The current crisis has demonstrated the urgency of that strategy. Whether it will provide the political will to implement it remains to be seen.
Q&A: Unpacking the Government’s LPG Crisis Management
Q1: What is the scale of the LPG supply disruption caused by the West Asia war?
A: Around 54 per cent of India’s LPG supplies have been effectively disrupted due to the closure of the Strait of Hormuz, through which over 90 per cent of India’s LPG imports pass. India imports about 20 million tonnes of LPG annually out of total consumption of 33 million tonnes. The disruption has forced the government to take drastic measures to prioritise household supplies.
Q2: What measures has the government taken to boost domestic LPG production?
A: The government ordered refineries to maximise LPG production and directed them to divert propane, butane, and other streams from petrochemical manufacturing to LPG production. These measures have led to a 40 per cent increase in domestic LPG production compared to pre-conflict levels. Refineries have adjusted their operating parameters to prioritise LPG over other products like petrol and diesel.
Q3: How has the government managed LPG demand during the crisis?
A: The government increased waiting times between cylinder bookings from 21 days to 25 days in urban areas and 45 days in rural areas to discourage panic buying and hoarding. This has helped reduce daily bookings from a peak of 89 lakh cylinders on March 13 to around 55 lakh per day, close to pre-conflict levels. The government has also prioritised household consumers over commercial and industrial users.
Q4: What alternative fuels are being promoted for commercial consumers?
A: The government has activated alternative fuel streams like kerosene, fuel oil, biomass, and even coal for commercial consumers. This allows LPG supplies to be reserved for households. City gas distribution companies are also being encouraged to expedite PNG connections, with over 3.5 lakh connections activated in the first three weeks of March and capacity to activate another 15 lakh in the next 10 days.
Q5: What long-term lessons does the crisis offer for India’s energy security?
A: The crisis highlights India’s vulnerability to supply disruptions through a single chokepoint. Long-term solutions include diversifying import sources, enhancing domestic production capacity, and accelerating the shift to piped natural gas (PNG) where pipeline infrastructure exists. The current crisis has demonstrated the urgency of these measures and may provide political will for implementation. The government has introduced a framework for time-bound PNG connections and transparent dispute resolution to support the transition.
