The government has increased gas allocation to fertiliser plants by 5%, taking total supply to around 95% of their six-month average consumption, as it looks to safeguard output in a volatile global energy environment.

The move comes as policymakers continue to recalibrate domestic gas distribution following supply disruptions linked to the ongoing West Asia conflict.

Focus on fertiliser output and farm sector stability

The latest increase is aimed at ensuring uninterrupted fertiliser production, a critical input for the agriculture sector. Fertiliser plants are among the highest priority sectors for gas allocation, given their direct link to food security.

PNG expansion gathers pace

Alongside supply-side adjustments, the government has also mentioned about the progress in expanding city gas infrastructure.

According to the Ministry of Petroleum and Natural Gas, since March around 4.15 lakh PNG connections have been gasified and nearly 4.55 lakh additional customers have registered for new connections.

The push is part of a broader strategy to increase the share of natural gas in India’s energy mix while strengthening last-mile connectivity.

How gas allocation has been recalibrated since the crisis

Since the escalation of tensions in West Asia, the government has been actively managing gas allocation across sectors to balance limited supply. When the war escalated early March, the initial supply disruptions led to tighter allocation, with priority given to fertiliser and city gas distribution (CGD) segments.

By mid-March, supplies to sectors such as power and industrial users were curtailed to prioritise fertiliser and city gas distribution. The government stepped up monitoring of allocation patterns in late March as global LNG prices surged and shipping routes came under pressure.

By early April, incremental increases in allocation to priority sectors began, as the government sought to normalise fertiliser output and stabilise downstream impact.

In the latest move, allocation to fertiliser plants increased by 5%, taking supply to ~95% of average six-month consumption, indicating a calibrated easing after initial tightening.

This phased approach indicates a balancing act between ensuring availability for critical sectors and managing constrained global supply.

Windfall tax hike on export fuel

The increase in domestic allocation comes a day after the government raised the windfall tax on crude oil production and fuel exports. The move is aimed at capturing higher gains from upstream producers while ensuring adequate domestic availability of fuel, particularly at a time when global markets remain volatile.

India continues to rely on imports for a major portion of its gas requirements, making it vulnerable to global supply shocks. With disruptions in West Asia impacting both crude and LNG markets, the government’s strategy has focused on prioritising essential sectors, expanding domestic distribution, and maintaining price stability.