Commercial LPG shortage hits restaurants, oil ministry sets up panel

New Delhi: The oil ministry has constituted a committee to examine supply issues after a sudden shortage of commercial LPG cylinders alarmed the hospitality sector, with restaurant associations warning that eateries could shut down within days if supplies are not restored.

As the widening conflict in the Middle East disrupted fuel lifelines, including India’s LPG supplies, the government has prioritised cooking gas supplies to households. This has led to a supply crunch for hotels and restaurants that rely on market-priced commercial LPG cylinders.

“For LPG supply to other non-domestic sectors, a committee of three Executive Directors (EDs) of Oil Marketing Companies (OMCs) has been constituted to review the representations for LPG supply to restaurants, hotels and other industries,” the ministry said in a post on X.

India consumes about 31.3 million tonnes of LPG annually. Nearly 87 per cent of this is used in the domestic sector, mainly household kitchens, while the rest is consumed by commercial establishments such as hotels and restaurants.

Around 62 per cent of the country’s LPG requirement is met through imports. The US and Israeli attacks on Iran and Tehran’s retaliation have effectively shut the Strait of Hormuz, a key route through which India receives 85–90 per cent of its LPG imports from countries such as Saudi Arabia.

With alternate sources being explored, the limited supplies available have forced the government to prioritise domestic consumption, leaving commercial establishments facing shortages.

Industry sources said the disruption has already begun affecting operations in cities such as Mumbai and Bengaluru, where hotels and restaurants are struggling to secure cooking gas.

Vijay Shetty, president of the India Hotels and Restaurant Association, said the shortage is spreading rapidly and could soon paralyse the sector.

While maintaining that the country has adequate fuel stocks, the ministry in recent days directed refineries to maximise LPG output by curtailing petrochemical streams. It has also extended the LPG refill booking cycle to 25 days from 21 days.

“In light of current geopolitical disruptions to fuel supply and constraints on LPG availability, the ministry has issued orders to oil refineries to increase LPG production and utilise the additional output for domestic consumption,” the ministry said in the post.

“The ministry has prioritised domestic LPG supply to households and introduced a 25-day inter-booking period to avoid hoarding and black marketing.”

The government said non-domestic supplies from imported LPG are being prioritised for essential sectors such as hospitals and educational institutions.