MoPNG Invokes Essential Commodities Act for Gas Allocation

Introduction

The Ministry of Petroleum and Natural Gas has officially invoked the Essential Commodities Act, 1955 to manage natural gas distribution during a critical period. A gazette notification dated March 9 outlines a new framework designed to divert supplies toward specific priority sectors. This move comes as the government seeks to stabilize domestic energy needs amidst significant disruptions in global supply routes. The directive establishes a tiered structure ensuring that essential services receive uninterrupted support while other consumers face adjusted allocations based on recent consumption patterns.

Structured Allocation Priorities

The notification introduces a clear hierarchy for gas distribution, prioritizing sectors deemed vital for daily life and agriculture. Domestic piped natural gas supply, Compressed Natural Gas for transport, and Liquified Petroleum Gas production have been accorded the highest status. These sectors are slated for priority allocation with supplies to be upheld uninterrupted at one hundred per cent of their average consumption from the previous six months. This ensures that vehicular fuel and household energy remain accessible despite external pressures. Further down the list, fertilizer plants will receive seventy per cent of their consumption requirements, also premised on average usage over the last half-year. Industrial consumers supplied through the natural gas grid and commercial users managed by CGDs are set to receive eighty per cent of their needs. This structured approach aims to balance industrial output with essential public welfare during times of scarcity.

Corporate Adjustments and Supply Chain Shifts

To facilitate this redistribution, specific entities face curtailment in their gas supplies. The gazette states that full or partial curtailment will be applied to ONGC Petrol additions Limited, GAIL Pata Petrochemical, and Reliance O2C. These reductions are necessary to support the higher-priority sectors identified by the ministry. Additionally, oil refining companies must absorb the impact of LNG supply disruptions by reducing gas allocation to refineries. This reduction is set at approximately sixty five per cent of past six months' consumption, subject to operational feasibility. The context for these strict measures lies in the ongoing geopolitical instability. About thirty per cent of India’s natural gas requirements are routed through the Strait of Hormuz. With LNG shipments disrupted due to tensions in West Asia and suppliers invoking force majeure, the government has stepped in to manage the shortfall. Currently, India consumes 195 million metric standard cubic metres per day, importing half of these requirements.