Commercial LPG shortage in India: What's causing it, impact on hotels, restaurants, households, and more

Several cities across India, including Delhi, Mumbai and Chennai, are currently facing a shortage of LPG cylinders, with households, restaurants and small businesses reporting supply delays. The disruption comes at a time when global energy markets are under pressure due to tensions in West Asia, which has affected fuel supplies and transportation routes.

India depends heavily on imported LPG to meet domestic demand as the country consumes about 31.3 million tonnes of LPG annually and imports roughly 62 per cent of that requirement, much of it passing through the Strait of Hormuz, a crucial global energy shipping route. The current disruption has pushed up shipping costs and delayed cargo movement through important energy corridors.

Why are LPG cylinders hard to find in India right now?

The supply crunch is majorly driven by disruptions in the global gas trade caused by the conflict in West Asia involving Iran, Israel and the US. The resultant disruption at the Strait of Hormuz has throttled LPG supplies reaching India. The situation has been further aggravated by developments in the Gulf region, with Iraq reportedly cutting output from its southern oilfields by around 70 per cent while Kuwait has declared force majeure, adding pressure to global fuel supplies.

What’s driving the price increase?

India imports a large share of its LPG from the Gulf region. As freight costs increase and deliveries slow down, distributors across cities such as Mumbai, Bengaluru, Delhi, Chennai and Hyderabad have struggled to maintain regular cylinder availability.

Oil marketing companies have also had to adjust distribution schedules because of fluctuating global prices and logistical challenges. These disruptions have led to not only price increases but also delays in refilling and delivery in several urban centres. 

Why are restaurants and hotels facing the worst impact?

Commercial establishments such as restaurants, hotels and small food businesses are among the worst affected by the shortage. These businesses rely heavily on commercial LPG cylinders for daily cooking operations.

Reports from cities like Mumbai indicate that supply shortages have forced some eateries to temporarily close or reduce operations because they could not secure enough cylinders. Industry groups say a significant number of restaurants have faced operational difficulties as deliveries remain inconsistent.

Unlike households, which receive subsidised domestic cylinders, commercial users depend entirely on market-priced LPG. As supply tightens and costs increase, these businesses face higher operating expenses along with the risk of fuel shortages.

What has the government done to manage the situation?

To manage the situation, the government has invoked provisions under the Essential Commodities Act (ECA) and the Essential Services Maintenance Act (ESMA) to prioritise domestic LPG supplies for households over commercial users. Refineries have been asked to operate at full capacity while directing additional production primarily toward household consumption. The booking interval for domestic cylinders has also been extended from 21 days to 25 days to discourage hoarding.

Has the government taken any other steps to fix the shortage? 

The government has also moved to ration natural gas supplies, prioritising households receiving piped natural gas as well as vehicles that run on compressed natural gas (CNG).

However, industry officials say the shortage may not last long. Government authorities and oil companies are exploring alternative supply routes and working to secure additional shipments to stabilise availability.

Earlier, India procured oil and energy resources from 27 countries, but amid the ongoing West Asia conflict, the government has widened its network and is now sourcing supplies from around 40 countries.

Union Petroleum and Natural Gas Minister Hardeep Singh Puri has already reached out to several prospective supplier nations to strengthen supply arrangements and ensure energy availability as soon as possible.