Iran war impact: Govt order prioritising domestic LPG supplies causes confusion among OMCs and distributors; restaurants fear shortage of commercial cylinders

A recent Order issued by the Ministry of Petroleum and Natural Gas to prioritise the production and supply of Liquefied Petroleum Gas (LPG) for domestic consumers has caused confusion and fear of commercial LPG scarcity among hotels and restaurants across the country.

Ongoing war in the Gulf region and disruptions in supply chain and concerns over availability of petroleum and allied products have heightened the concern.

The hospitality sector fears that any sudden stoppage of commercial LPG will lead to immediate operational shutdowns for restaurants and hotels, severe disruption in food supply for millions of citizens, large – scale job losses across the hospitality value chain, negative impact on tourism, travel and business ecosystems and significant financial losses to small and medium hospitality enterprises.

“We are getting calls from our members in Pune, Mumbai, Chennai, Bengaluru and several other cities saying LPG distributors are restricting supply of commercial LPG cylinders citing the ministry’s Order. If this condition persists, restaurants may be forced to shut down within a couple of days”, says Jaison Chacko, Secretary General, Federation of Hotel & Restaurant Associations of India (FHRAI).

In a letter to Hardeep Singh Puri, Minister of Petroleum and Natural Gas, FHRAI, the apex body representing 60,000 hotels and 5,00,000 restaurants across India has asked the ministry to issue a clarification to its Order to ensure seamless distribution of commercial LPG cylinders.

“We fully appreciate the Government’s commitment to ensuring uninterrupted availability of LPG for household consumption across the country. Ensuring adequate supply of domestic cooking fuel is indeed a matter of national priority and public interest. However, the Order specifies that LPG produced from Propane and Butane streams shall be supplied to the Public Sector Oil Marketing Companies and that the LPG so procured shall be marketed solely to consumers of domestic LPG”, FHRAI’s letter to the minister said.

“The hospitality industry is concerned that the interpretation or implementation of this provision may effectively restrict the availability of commercial LPG, which is the primary fuel used by hotels, restaurants, catering establishments and institutional kitchens across the country”, it added.

Chacko said the hospitality and food service sector relies heavily on commercial LPG for daily operations and pointed out that any disruption or curtailment in its supply would have a severe operational impact over 7–8 million establishments, employing over 70 million direct workers, supporting millions more through indirect employment.

The federation says that in the absence of a formal notification clarifying the Order, there is widespread disruption in supplies at the ground level. “Currently several distributors are withholding supplies, citing the restrictive language of the government Order”, its letter to the minister said.

The hospitality industry wants the government to provide clarity to oil marketing companies and LPG distributors that commercial LPG supplies to the hospitality sector must not be disrupted.