Commercial LPG shortage hits hotels, restaurants; Govt prioritises domestic LPG amid West Asia crisis, forms panel to ensure supply

NEW DELHI: A shortage of commercial LPG cylinders is affecting hotels and restaurants nationwide, with many forced to suspend operations. The government has formed a three-member committee to address grievances and prioritise domestic LPG supply.

The Bangalore Hotels Association released a notice stating, “The supply of gas cylinders for commercial use has been stopped from today. Essential services like senior citizens, students, and hospitals rely on it. Immediate action is expected from Union Ministers to resume commercial gas supply”.

In Madhya Pradesh, Bhopal witnessed a temporary halt in commercial LPG cylinder distribution. The national vice-president of the LPG Association, RK Gupta, confirmed that commercial cylinders have not been issued since Monday, except for hospitals and educational institutions. “The next booking will be allowed after a 25-day inter-booking period to avoid hoarding, and there is no shortage as claimed by oil companies,” he said.

Additionally, Industry representatives emphasised that domestic LPG supply remains the top priority. Executive president of the All India LPG Distributors Federation, P N Seth, said, “There is no shortage, and supply of commercial and domestic cylinders is continuing as usual. Discussions are being held with distributors and stakeholders to ensure smooth supply”.

Federation president Chandra Prakash added, “The govt, oil companies, and distributors are focused on domestic cylinders first; essential commercial services like hospitals are prioritised, but supply to restaurants has been temporarily halted”.

This comes in the backdrop of escalating war in West Asia between Iran, Israel and the United States, which has spread to the Gulf countries. Due to reprioritisation, domestic LPG production has increased by 10 per cent in the last few days and consignment of LPG and LNG is coming from various sources.

Sources said a new consignment of LPG/LNG is expected very soon. “We were in crisis earlier, but today we are not in any crisis of petroleum products. Indian refineries are running at full capacity as they were operating before the Iran-Israel conflict,” a source said. “We are sourcing 70 per cent of our crude oil supply from non-Strait of Hormuz sources. We entered this disruption better prepared,” the source added.

The sources also said that India will recover better than other countries once the West Asia crisis is over. The government, they said, has not made any decision to curb the export of refined oil.

Meanwhile, the Union Government has invoked the Essential Commodities Act (EC Act) to secure the nation’s energy supply in response to the escalating conflict in West Asia. While the move has led to a temporary tightening of commercial LPG availability, officials maintain that India’s energy infrastructure remains resilient, with refineries operating at full capacity.

To mitigate the impact of disrupted shipping lanes in the Strait of Hormuz, the government has mandated a reprioritisation of fuel resources

Refineries have been directed to maximise domestic LPG production specifically for household use. Priority supply (up to 100%) is now reserved for domestic piped natural gas, CNG for transport, and essential pipeline operations. Fertilizer plants are allocated 70%, while other industrial consumers and tea industries are receiving 80% of their six-month average.

All stakeholders in the gas supply chain–from producers to distributors–are now legally required to submit real-time data on production, stocks, and consumption to the Central Government. A 25-day inter-booking period has been implemented for consumers to prevent hoarding and black marketing.

The government acknowledges the strain this has placed on the hospitality sector. Union Petroleum Minister Hardeep Singh Puri has established a three-member committee–comprising Executive Directors from IOC, HPCL, and BPCL–tasked with reviewing the grievances of restaurants, hotels, and catering associations.

“The genuine requirement of restaurant associations for commercial LPG will be met,” a government source stated, noting that the committee will re-prioritise supplies based on verified operational needs.

The crisis has triggered localised shortages in states like Karnataka, Madhya Pradesh, and Tamil Nadu, where restaurant associations have warned of potential closures. Karnataka CM Siddaramaiah has formally urged the Union Minister to address the unintended shortage in Bengaluru, highlighting the threat to the city’s food service industry.

Tamil Nadu CM M K Stalin has reached out to the Prime Minister, seeking support for the hospitality sector alongside efforts to ensure the safety of Indian citizens and fishermen in the affected Gulf regions. Similarly, Rajya Sabha MP and AIADMK leader I S Inbadurai has written a letter to Union Petroleum and Natural Gas Minister Hardeep Singh Puri and sought urgent intervention to ensure the uninterrupted supply of Commercial and Domestic LPG.

Reacting to the crisis, the opposition party leaders have also criticised the government’s handling of the situation. Congress accused the central government of failing to respond adequately to commercial LPG cylinder shortages. Karnataka Deputy Chief Minister DK Shivakumar said the situation could severely affect hotels, hospitals and other establishments.

Shivakumar added, “Today, the entire country is boiling. All hotels want to close because they don’t have gas. All prices will shoot up. Everyone has to look at alternatives like firewood, electric stoves, or kerosene stoves.”

Meanwhile, Tamil Nadu Chief Minister M K Stalin has written to Prime Minister Narendra Modi, urging the Union Government to intervene to ensure the safety of Tamils living across Gulf countries and also to examine the supply of LPG cylinders.

Stalin held a review meeting on Tuesday morning to assess the possible impact of the ongoing US- Iran conflict on Tamil Nadu and to chart the necessary response measures. “I have written to the Hon’ble PM Modi, urging the Union Government to ensure the safety of Tamils living across the affected Gulf countries and to safeguard the welfare of Tamil Nadu fishermen who are currently stranded in the region,” the Tamil Nadu chief minister said in a post on X.

Speaking to reporters outside Parliament, Priyanka Gandhi Vadra spoke on reports of commercial LPG cylinder shortage, saying the country is facing a deepening crisis and criticised the government for bending down before the US in the trade deal. “The crisis is deepening and it will deepen. The manner in which our government has bent before the US in the trade deal, the crisis will deepen. A war is also going on. So, this will deepen,” Vadra added.

Congress MP Shashi Tharoor also described the shortage as a “very serious problem” with rising prices and limited availability due to the Iran conflict.

Despite the disruption, officials emphasise that India entered this crisis in a stronger position than many other nations. India is currently sourcing 70% of its crude oil from regions outside the Strait of Hormuz.

Indian refineries are running at pre-conflict capacity levels, and the government has not moved to curb the export of refined oil. New consignments of LPG and LNG are expected shortly, with the government projecting a faster economic recovery for India once the regional conflict stabilises.

All City Gas Distribution entities have been asked to ensure that industrial and commercial consumers supplied through their networks receive eighty per cent. of their past six-month average gas consumption, subject to operational availability.

The oil refining companies have been ordered to absorb the impact of LNG supply disruption to the extent feasible by reducing gas allocation to refineries to approximately sixty-five per cent. of the past six months’ gas consumption, subject to operational feasibility.

Every producer, importer, transporter, marketer or distributor of natural gas, including LNG and regasified LNG, has been asked to furnish information relating to production, imports, stocks, allocation, supply and consumption to the Central Government or to any officer authorised by it.

“In light of current geopolitical disruptions to fuel supply and constraints on supply of LPG, the Ministry has issued orders to oil refineries for higher LPG production and using such extra production for domestic LPG use,” the Ministry of Petroleum and Natural Gas said in a post on X.

Refineries and petrochemical units are expected to absorb the impact of LNG disruptions, with a 35 per cent reduction in gas allocation, while India offsets the shortfall by sourcing crude from non-Strait of Hormuz routes.

The Strait of Hormuz, located between Iran and Oman, connects the Persian Gulf to the Arabian Sea and serves as one of the world’s most important oil transit routes. Any disruption in the waterway could have major consequences for global energy markets and international trade.

Tensions between the US and Iran have escalated in recent days amid concerns over maritime security and the potential threat to commercial shipping in the region. (ANI)