Centre announces extra 20% LPG allocation to states amid global energy crisis — what it means

Which industries will benefit from the additional allocation?

Commenting on the priority of the distribution, the minister laid out further propositions:Additional supplies are to be directed towards industries such as steel, automobile, textile, dye, chemicals and plastics, given their labour-intensive nature and their role in supporting other essential sectors. Within these, preference will be given to process industries or units that depend on LPG for specialised heating needs that cannot be replaced by natural gas.At the same time, industries will be required to meet conditions such as registration with oil marketing companies (OMCs) and applying for PNG connections with city gas distribution (CGD) entities in order to be eligible for LPG under the additional 20% allocation. In this case, if a certain sector uses LPG, such that it can not be substituted by natural gas, these requirements “would stand waived.”The official also called on all states to immediately utilise the 10% reform-based allocation, if they have not already done so. “I also urge all states to avail of the 10% reform-based allocation immediately, if they have not already done so.”“With this the allocation to commercial/industrial LPG will rise to 70% (with 10% reform based) and enable relief to industrial operations in the state,” the letter added.

Government reassures sufficient energy supply

The latest direction comes a day after the government issued a public assurance on fuel security, stating that there is no shortage of petrol, diesel or LPG anywhere in the country. The ministry said that the supply network remains firmly under control and cautioned against what it termed a coordinated misinformation campaign aimed at triggering panic among consumers.The ministry also reiterated its earlier clarification rejecting claims that LPG refill booking timelines had been altered. Responding to concerns amid the ongoing Middle East crisis, it said domestic LPG availability remains sufficient and output has been ramped up significantly following the LPG Control Order.Refinery production within the country has increased by 40% to 50 TMT per day, meeting more than 60 per cent of the estimated daily demand of around 80 TMT. This has reduced the need for imports to 30 TMT per day. The government has already secured 800 TMT of LPG cargoes, which are currently on their way from the United States, Russia and Australia, with deliveries being handled through 22 import terminals, compared to 11 in 2014.Officials said that the country currently has around one month’s LPG supply secured, while procurement efforts continue. Oil marketing companies are distributing over 50 lakh cylinders each day. Demand had briefly spiked to 89 lakh cylinders amid panic buying but has since stabilised. Earlier, commercial LPG allocation had been raised to 50 per cent in consultation with states to curb hoarding and black marketing.To cushion consumers from rising oil prices, the government has reduced central excise duty on petrol and diesel by Rs 10 per litre each for domestic consumption. Union Finance Minister Nirmala Sitharaman said in a social media post that the decision was taken in view of the West Asia crisis and would help protect consumers from rising prices. To ensure adequate domestic availability, export duties have been imposed on diesel at Rs 21.5 per litre and on Aviation Turbine Fuel at Rs 29.5 per litre.