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India Directs Natural Gas to Priority Sectors
10 Mar
Summary
- Natural gas is being diverted to priority sectors under the Essential Commodities Act.
- The move aims to address supply disruptions linked to the West Asia conflict.
- The Act empowers the government to control essential commodity production and distribution.
The Indian government has issued an order under the Essential Commodities Act, 1955, to reallocate natural gas towards priority sectors. This directive prioritizes domestic piped natural gas (PNG), compressed natural gas (CNG) for vehicles, liquefied petroleum gas (LPG) production, fertiliser manufacturing, the tea industry, and other industrial consumers. This action follows recent directives for refineries to exclusively use their propane, butane, propylene, and butene output for LPG production and for domestic producers to supply all LPG output to state-run Indian Oil, Bharat Petroleum, and Hindustan Petroleum.
The underlying cause for these measures is the disruption in oil and gas markets, attributed to the ongoing conflict involving the United States and Israel against Iran. The Essential Commodities Act, originally rooted in World War II-era regulations, empowers the central government to control the production, supply, and distribution of essential commodities. Amendments in 2020 now limit the imposition of stockholding limits to extraordinary circumstances like war, famine, natural calamities, or sharp price surges, requiring significant price increases for such measures to be triggered.
