The cumulative hike in commercial LPG cylinder prices over the past five months is ₹1,498. P.P. Abdurahman from the Kerala Hotel and Restaurant Association stated, “The unilateral ₹1,000 increase is unprecedented in India and wholly unjustifiable.” He warned that if such price increases continue, establishments would need to raise food prices by 50% to 60% to survive.

The government aims to promote piped natural gas (PNG) connections and reduce reliance on LPG. Households with PNG infrastructure will lose their LPG connections by June 30, 2026. Authorities are currently identifying households using both LPG and PNG services.

New rules for gas cylinder connections were issued by the Ministry of Petroleum and Natural Gas in March 2026. Households with a PNG connection cannot apply for new LPG or LPG refills. City gas distribution companies are advised to prioritize PNG connections for commercial establishments.

Observers expect further unrest as business owners grapple with these rising costs. The protests highlight the tension between regulatory changes and the economic realities facing the food sector.

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As the ongoing conflict in West Asia continues to disrupt global fuel supply chains, India has found itself facing significant challenges in securing its liquefied petroleum gas (LPG) imports. The situation has been exacerbated by disruptions in liquefied natural gas (LNG) shipments through critical routes such as the Strait of Hormuz, leading suppliers to invoke force majeure and divert gas supplies to priority sectors. In response to these challenges, the Central Government of India has taken decisive action.

Issuance of the Natural Gas Supply Regulation Order

On March 9, 2026, the Central Government issued the Natural Gas (Supply Regulation) Order, 2026, under the Essential Commodities Act of 1955. This regulation aims to ensure equitable distribution of natural gas amid the ongoing disruptions caused by the West Asia conflict. The order outlines a structured approach to managing gas supply, prioritizing various sectors based on their critical needs.

Prioritization of Sectors

The regulation categorizes gas supply into four priority sectors. Priority Sector I includes domestic piped natural gas (PNG), compressed natural gas (CNG), LPG production, and essential pipeline operational needs, which will receive 100% of their average gas consumption. Priority Sector II encompasses fertilizer plants, which will be allocated 70% of their average gas consumption. Priority Sector III covers tea industries and other industrial consumers connected to the national gas grid, receiving 80% of their average consumption. Lastly, Priority Sector IV applies to industrial and commercial consumers supplied through City Gas Distribution (CGD) networks, also receiving 80% of their average consumption.

Impact on Non-Priority Sectors

To meet the requirements of these priority sectors, gas supplies may be curtailed from non-priority sectors. Notably, oil refineries have been directed to reduce their gas consumption to approximately 65% of their past six-month average. This significant reduction highlights the government’s commitment to ensuring that essential services and industries are adequately supplied with natural gas during this critical period.

Management and Compliance

GAIL has been designated as the entity responsible for managing the diversion and redistribution of natural gas under the new order. Furthermore, all entities involved in the natural gas sector are required to furnish detailed information on production, imports, stocks, allocation, and consumption to the Petroleum Planning and Analysis Cell. This transparency is crucial for effective management of the gas supply chain during these challenging times.

Significance of the Regulation

The issuance of the Natural Gas Supply Regulation Order is a significant step for the Indian government as it seeks to navigate the complexities of the current global energy landscape. The order overrides existing Gas Sale Agreements and other commercial arrangements, reflecting the urgency of the situation. As the government prioritizes LPG supply for households, it aims to ensure energy security for citizens amid ongoing uncertainty in the global oil and energy markets triggered by the West Asia crisis.

Current State and Future Outlook

As of now, the regulation is in effect, and the government is closely monitoring the situation to ensure that the supply of natural gas meets the needs of the prioritized sectors. The impact of this regulation will be closely observed in the coming weeks as the government continues to adapt to the evolving energy crisis. The focus remains on maintaining stability in gas supply while addressing the challenges posed by international disruptions.

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On March 9, 2026, the Central Government of India took a significant step to address the ongoing disruptions in the global fuel supply chain caused by the conflict in West Asia. The government issued the Natural Gas (Supply Regulation) Order, 2026, aimed at regulating the supply of natural gas across the country. This decision comes in light of the challenges faced in liquefied natural gas (LNG) shipments, particularly through the Strait of Hormuz, where suppliers have invoked force majeure and redirected gas supplies to priority sectors.

The regulation was enacted under the Essential Commodities Act of 1955 and seeks to ensure equitable distribution of natural gas during a time of heightened uncertainty in the global oil and energy markets. The ongoing conflict has significantly impacted India’s LPG imports, prompting the government to prioritize the supply of liquefied petroleum gas (LPG) for households to maintain energy security for its citizens.

The Natural Gas (Supply Regulation) Order categorizes consumers into four priority sectors. Priority Sector I includes domestic piped natural gas (PNG), compressed natural gas (CNG), LPG production, and essential pipeline operational needs, which will receive 100% of their average gas consumption. Priority Sector II, which encompasses fertilizer plants, is allocated 70% of its average gas consumption. Meanwhile, Priority Sectors III and IV, which include tea industries and other industrial consumers connected to the national gas grid, as well as industrial and commercial consumers supplied through City Gas Distribution (CGD) networks, will receive 80% of their average consumption.

In a notable directive, oil refineries have been instructed to reduce their gas consumption to approximately 65% of their average over the past six months. This measure is part of a broader strategy to ensure that gas supplies can be redirected from non-priority sectors to meet the needs of those classified as priority sectors. GAIL has been designated to manage the diversion and redistribution of natural gas under this new order, which overrides existing Gas Sale Agreements and other commercial arrangements.

All entities involved in the natural gas sector, including major players such as ONGC, Reliance Industries Limited, Oil India Limited, and Vedanta Limited, are now required to furnish detailed information regarding their production, imports, stocks, allocation, and consumption to the Petroleum Planning and Analysis Cell. This requirement aims to enhance transparency and facilitate better management of gas resources during this critical period.

The government’s decision to prioritize LPG supply for households and essential non-domestic sectors, such as hospitals and educational institutions, reflects its commitment to ensuring that basic energy needs are met despite the challenges posed by the global energy crisis. The order aims to ensure equitable distribution of gas after disruptions in LNG shipments, which have been exacerbated by the ongoing conflict.

As the situation develops, the implications of these regulations will be closely monitored by industry stakeholders and consumers alike. The measures taken by the Central Government are crucial for maintaining energy security and stability in the face of external pressures affecting the gas supply chain.

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