Auto industry seeks restoration of LPG, PNG, propane gas supply; warns of production cuts

India’s auto and auto component firms are seeking restoration of gas allocation as the Rs 20 lakh crore automobile industry looks to meet their production schedules with minimal disruption.

In a letter to the Ministry of Petroleum and Natural Gas, the Society of Indian Automobile Manufacturers (SIAM) flagged that any restrictions in the supply of liquefied petroleum gas (LPG), piped natural gas (PNG) and propane to the automobile sector and its ancillary industries may adversely impact the supply chains of vehicle manufacturers, potentially leading to disruptions in vehicle production across the country, triggering reduced manufacturing and allied employment challenges.

Business Today has reviewed a copy of the letter.

Automakers and a large number of auto ancillary firms depend on supplies of liquefied petroleum gas (LPG), piped natural gas (PNG) and propane gas for several critical processes in vehicle and component manufacturing, including castings, forgings, paint shops, and other heat-intensive operations.

Over the years, vehicle manufacturers and the ancillary industries have transitioned from oil-based fuels to gaseous fuels primarily due to environmental considerations and the need to adopt cleaner production practices.

“It is important to recognise that any change in fuel type requires substantial investment in capital expenditure in infrastructure, considerable time for implementation, and adherence to safety protocols and approvals, as such systems carry inherent risks, including the possibility of life-threatening fire hazards. Therefore, the availability of LPG/PNG/Propane supplies has become critical for the uninterrupted operation of these manufacturing units,” the letter said.

The Ministry of Petroleum and Natural Gas has directed Oil Marketing Companies (OMCs) to ensure that LPG is supplied only for domestic cooking gas purpose. The government has also invoked the Essential Commodities Act (ECA) to ensure an uninterrupted supply of domestic cooking gas.

SIAM has requested that the petroleum ministry to restore the allocation of LPG, PNG, and propane gas to the “greatest extent possible and provide visibility on the availability” of gas supplies for industrial consumers in the automobile sector through a dedicated interface.