Govt invokes ESMA powers, orders refiners to ramp up LPG production
New Delhi (PTI): The government invoked sparingly used emergency powers to direct oil refineries to ramp up LPG production as it looks to increase the availability of domestic cooking gas to hedge against potential disruptions from the widening Middle East conflict.
India consumed 31.3 million tonnes of LPG in 2024-25, of which only 12.8 million tonnes were produced domestically, with the remainder imported. Imports have become increasingly vulnerable as 85-90 per cent come from countries like Saudi Arabia that rely on the narrow but critical Strait of Hormuz for transit. The Strait has been effectively blocked following a week-old escalation in the region, after US and Israeli strikes on Iran prompted Tehran to retaliate against US bases in neighbouring countries.
While India has surplus oil refining capacity, it is short in LPG production. And now all public and private sector refiners have been asked to "maximise and ensure that propane and butane streams produced... are utilised for production of liquefied petroleum gas (LPG)," according to an oil ministry order of March 5.
LPG is a mixture of propane and butane.
The order, issued under the powers derived from the Essential Commodities Act of 1955 (popularly called ESMA), asked the refiners to make such LPG produced available to three public sector oil marketing companies - Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) only.
The refiners have also been barred from using the two chemicals for producing petrochemicals.
"All oil refining companies shall not divert, utilise, process, crack, convert or otherwise employ propane or butane stream for the manufacture of petrochemical products or other such downstream derivatives," the order said.
The LPG so produced is to be sold only to domestic households for use in cooking purposes, it said, adding any contravention of the order shall attract penal action.
India has 33.08 crore active LPG consumers, and the government is looking to maintain an uninterrupted supply.
Earlier, the government invoked ESMA provisions in the oil sector during the post-Ukraine war period, asking refiners to ensure domestic fuel availability and not to export, which had become lucrative due to high margins.
A top Oil Ministry official said the oil and gas supplies through the Strait of Hormuz have been impacted and the country was sourcing fuel from outside of the conflict zone.
LPG under the recently signed LPG import contract with the United States have also started coming in.
Under the deal, public sector oil companies will import about 2.2 million tonnes of LPG from the US Gulf Coast in 2026 - roughly 10 per cent of the country's annual LPG imports - in a move to diversify energy sources and bolster energy security.
While the country has adequate stock of crude oil (raw material for making petrol and diesel), as much as 30 per cent of the gas supplies have been hit.
To deal with the situation, allocation is being re-prioritised - enforcing supply cuts for some and augmenting those for critical sectors, he said.
India consumes about 195 million standard cubic meters of natural gas daily for generating electricity, producing fertilizers, turning into CNG for automobiles, piping to household kitchens for cooking and use as feedstock in industries ranging from steel to ceramic. Roughly half of this is imported.
However, India's main supplier, Qatar, has shut its liquefied natural gas (LNG) production facility after being hit by drones and missiles during the ongoing conflict. This together with restrictions in movement of ships through the Strait of Hormuz has effectively cut off 60 mmscmd of supplies.
The official said companies are looking to buy LNG - super-cooled natural gas - from elsewhere. "A company bought a cargo (shipload of LNG) just yesterday."
"We are comfortably placed. Crude oil continues to flow. Even before the conflict broke out on February 28, 55 per cent of our sourcing was from non-Strait countries, which will now go up," he said, adding the vulnerability on LPG has been addressed through the order issued on March 5.
Besides, Russian oil being made available after the US waiver for one month will further augment supplies.
"We are in a comfortable position. All our options are open. Whatever we lost in the Strait of Hormuz, we have been able to pick elsewhere," he said.
LNG is being scouted around the globe, he said, expressing optimism that more supplies will be managed in the near future.
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Rajnath Singh chairs IGoM meet, urges constant vigil over West Asia crisis
New Delhi (PTI): Defence Minister Rajnath Singh on Thursday emphasised the need for round-the-clock monitoring of the West Asia conflict and called for a calibrated response to deal with any eventuality to ensure that national interests remain protected.
Singh made the comments while chairing a high-level meeting of the Informal Group of Ministers (IGoM) set-up to monitor the situation in West Asia.
The meeting was attended by External Affairs Minister S Jaishankar, Finance Minister Nirmala Sitharaman, Oil Minister Hardeep Singh Puri, Power Minister Manohar Lal, Chemicals and Fertilizers Minister J P Nadda, Consumer Affairs Minister Prahlad Joshi and Minister of Railways, Information and Broadcasting, Electronics and Information Technology Ashwini Vaishnaw.
In view of the "uncertain situation", the defence minister underlined the importance of round-the-clock monitoring of the situation and the need to respond in a calibrated manner to deal with any eventuality, an official readout said.
He stressed on the need to leave no stone unturned to ensure that the people of the country face the minimum effect of the conflict, it said.
It was the second meeting of the IGoM after it was set up last month.
The IGoM was apprised of the measures being taken by the government in the wake of the ongoing West Asia conflict, Singh said on social media.
"We also deliberated upon the next steps to be taken by the government to mitigate any adverse impact arising due to the ongoing conflict," he said.
The defence ministry said in the readout said, "In the meeting, the seven empowered groups of secretaries briefed the IGoM on the steps being taken to tackle the situation."
"The IGoM was apprised about measures undertaken by the Ministry of Finance to address concerns arising due to global trade disruptions and provide relief and support to the industry, especially manufacturing, and bolster investor confidence," it said.
It listed measures including notification issued on Wednesday on full customs duty exemption on 40 critical petrochemical products till June 30.
The ministry also mentioned announcement of a special one-time relief measure for eligible units in SEZs to sell manufactured goods in Domestic Tariff Area (DTA) at concessional customs duty rates to be effective from April 1 to March 31.
It also noted another notification issued by the Department of Revenue clarifying that the provisions of GAAR (General Anti Avoidance Rules) will not be invoked in respect of investments made prior to April 1, 2017.
"These measures will reduce cost pressures on downstream sectors including textiles, packaging and pharmaceuticals, facilitate supply stability in the country and provide requisite clarity for investors contemplating investments in India," the readout said.
Defence Minister Singh appreciated the government's decision to impose a 25 per cent cap on the monthly increase in aviation turbine fuel prices for domestic operations, with effect from April 1.
This step will help protect the people from sudden increase in fares, he said.
The government has accorded highest priority to domestic LPG supply, with refinery production enhanced to fully meet consumption requirements, according to the readout.
"The IGoM was informed that there have been no reports of dry-out at LPG distributorships, and delivery of domestic LPG (liquefied petroleum gas) cylinders continues as per the normal schedule. The temporary supply concerns arose due to instances of hoarding and black marketing, which triggered panic buying in certain areas," it said.
The ministers were informed that strict enforcement action is being undertaken, with raids being carried out across multiple states and Union territories to curb hoarding and black marketing of LPG, the ministry said in the readout.
Action has also been taken against some LPG distributors who engaged in malpractices, it said.
"To support migrant labour and low-consumption households, the government is ensuring adequate availability of 5 kg free trade LPG cylinders, and since March 23, over 4.3 lakh such cylinders have been sold. Special focus is being given to states where demand is higher," it said.
The IGoM was apprised that industrial requirements dependent on commercial LPG are being met, with over 80 per cent of pre-crisis supply levels being maintained to ensure continuity of operations.
"Special meetings have been held with ministries and stakeholders of different industries to understand their demand and meet their needs. Oil PSUs are ensuring continued supply of Auto LPG across the country," the readout noted.
"However, some supply constraints are being faced by private operators due to their procurement challenges, which is why lines are being observed at PSU auto LPG pumps. Wherever the autos are dual feed and can use petrol, they are being encouraged to use petrol," it said.
