Esma act

On March 10, 2023, the Indian Union Government invoked the Essential Commodities Act (ESMA) to address the challenges posed by geopolitical disruptions affecting fuel supplies, particularly liquefied petroleum gas (LPG). This decision was made in response to the ongoing West Asia Conflict, which has significantly impacted the availability of fuel in the region.

Key Developments

In a bid to ensure uninterrupted supply of domestic cooking gas, the Ministry of Petroleum and Natural Gas directed refineries and petrochemical units to maximize LPG production. The government emphasized the need for prioritizing domestic LPG supply to households to bolster energy security.

To facilitate this, the Ministry issued orders mandating that fertilizer plants maintain seventy percent of their past six-month average gas consumption. Additionally, gas marketing entities were instructed to ensure eighty percent gas supply to tea industries and other industrial consumers, while City Gas Distribution entities were required to maintain the same level of supply to industrial and commercial consumers.

Oil refining companies faced a reduction in gas allocation to approximately sixty-five percent of their past six-month gas consumption, allowing for a more equitable distribution of available resources. This strategic allocation aims to prevent shortages and ensure that critical sectors receive the necessary fuel.

Regulatory Measures

The government also introduced a 25-day inter-booking period to deter hoarding and black marketing of LPG. This measure is intended to regulate the availability and distribution of petroleum products and natural gas effectively.

Furthermore, all producers, importers, transporters, marketers, or distributors of natural gas are now required to furnish information to the Central Government, enhancing transparency and oversight in the supply chain.

Current State

As of now, the invocation of the ESMA Act has set in motion a series of regulatory measures aimed at stabilizing LPG supply in India. The government’s proactive approach reflects its commitment to ensuring that households have access to essential cooking gas amidst ongoing global supply challenges.

This sequence of events is significant for various stakeholders, including consumers, industries reliant on gas supply, and the government itself, as it seeks to navigate the complexities of energy security in a volatile geopolitical landscape.

In light of current geopolitical disruptions to fuel supply and constraints on supply of LPG, the Ministry stated, “In light of current geopolitical disruptions to fuel supply and constraints on supply of LPG, Ministry has issued orders to oil refineries for higher LPG production and using such extra production for domestic LPG use.” This underscores the urgency of the situation and the government’s commitment to addressing it.