India's LPG Supply Disrupted by Geopolitical Events

Government Forms Panel to Review LPG Supply Crunch as Hotels and Restaurants Face Shortage​

Commercial LPG Shortage Raises Alarm in Hospitality Sector​

New Delhi, March 10: The Ministry of Oil has constituted a committee to examine supply issues after a sudden shortage of commercial LPG cylinders raised concerns across the hospitality industry. Restaurant associations warn that eateries could face shutdowns within days if supplies are not restored.

The shortage has emerged as the ongoing conflict in the Middle East disrupts fuel supply chains, including liquefied petroleum gas (LPG) shipments to India. In response, the government has prioritized LPG supplies for household cooking, creating a supply crunch for hotels, restaurants, and other commercial establishments that rely on market-priced cylinders.

Ministry Sets Up Committee to Review Supply Requests​

The ministry said a panel has been formed to address representations from affected sectors.

"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.

The committee will evaluate requests from industries that depend on commercial LPG and assess possible measures to ease supply constraints.

Heavy Import Dependence Adds to Supply Challenges​

India consumes around 31.3 million tonnes of LPG annually. Approximately 87 percent of this demand comes from the domestic sector, mainly household kitchens, while the remaining portion is used by commercial establishments such as hotels and restaurants.

A significant part of the country’s LPG requirement is met through imports. About 62 percent of total demand relies on overseas supplies.

The current disruption has intensified after attacks involving the United States and Israel on Iran, followed by Tehran’s retaliation, which resulted in the closure of the Strait of Hormuz. The strategic waterway handles around 85 percent to 90 percent of India’s LPG imports from suppliers including Saudi Arabia.

Alternative Supply Sources Being Explored​

With the Strait of Hormuz closed, authorities are exploring alternative supply sources. However, the limited LPG availability has forced the government to channel supplies primarily toward household consumers.

This shift has begun affecting operations in major cities. Industry sources say hotels and restaurants in Mumbai and Bengaluru are already facing difficulties securing commercial LPG cylinders.

Vijay Shetty, president of the India Hotels and Restaurant Association, said the shortage is spreading rapidly and could soon severely disrupt the sector’s operations.

Government Steps Up Domestic Production​

The ministry has stated that the country currently maintains adequate fuel stocks but has introduced several measures to manage the supply situation.

Refineries have been directed to maximize LPG production by reducing petrochemical streams. Additionally, the LPG refill booking cycle for domestic consumers has been extended to 25 days from 21 days to prevent hoarding and black marketing.

"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.

The ministry added that domestic LPG supply to households remains the top priority, while imported LPG for non-domestic use is being allocated mainly to essential sectors such as hospitals and educational institutions.