Govt invokes Essential Commodities Act, directs refiners to prioritise domestic LPG supply
In an order issued by the Petroleum Ministry, all oil refiners operating in India have been asked to maximise the utilisation of propane and butane streams for LPG production and ensure that the output is made available exclusively to the three public sector OMCs— Indian Oil Corporation (IOCL), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL).
The order mandates that refiners must utilise all propane and butane streams produced, recovered or fractionated at their facilities for LPG production. Refiners have also been barred from diverting these streams for petrochemical manufacturing or other downstream derivatives.
“All oil refining companies shall not divert, utilise, process, crack, convert or otherwise employ propane or butane streams for manufacture of petrochemical products or other such downstream derivatives,” the order said.
Public sector OMCs have also been directed to ensure that the LPG procured under this mechanism is supplied solely to domestic LPG consumers.
The ministry warned that any violation of the order will attract action under the Essential Commodities Act, 1955, the Petroleum Products (Maintenance of Production, Storage and Supply) Order, 1999, and other applicable laws.
The directive has come into force with immediate effect and will remain operational until further orders from the central government.
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According to government sources, the move is aimed at ensuring adequate LPG availability in the country and forms part of a contingency plan to ramp up domestic LPG production if required.
More than 99% of the domestic LPG consumed in India is supplied to households by the three public sector OMCs. Any disruption in LPG supplies could have serious implications for over 33 crore domestic LPG connections across the country.
Sources said the government has asked refiners to divert certain petrochemical feedstock streams towards LPG production if necessary. Officials also indicated that India’s large refining capacity provides enough operational flexibility to increase LPG output.
The government views the order as a pre-emptive step to ensure the country remains in a comfortable supply position. Sources added that reprioritisation of gas supplies is being undertaken in consultation with industry stakeholders.
“If push comes to a shove, we will take other measures,” a government source added, indicating that further steps could be considered to safeguard domestic LPG availability.
