Govt Invokes Essential Commodities Act to Regulate Supply of Natural Gas in Wake of West Asia Crisis

The Union government has invoked the Essential Commodities Act, 1955 to regulate the supply of natural gas including LNG and re-gassified-LNG, in wake of the crisis in West Asia triggered by the US and Israel’s strikes on Iran.

Arvind Gunasekar

govt invokes essential commodities act to regulate supply of natural gas in wake of west asia crisis

FILE: Two traditional dhows sail by a large container ship in the Strait of Hormuz on May 19, 2023. Photo: AP/Jon Gambrell.

New Delhi: The Union government has invoked the Essential Commodities Act, 1955 to regulate the supply of natural gas including LNG and re-gassified-LNG, in wake of the crisis in West Asia triggered by the US and Israel’s strikes on Iran.

In an order dated March 9, the Ministry of Petroleum and Natural Gas has said that the central government, in order to ensure equitable distribution and continued availability of natural gas for priority sectors, considers it necessary to regulate production, sector-wise allocation and diversion of natural gas supplies, distribution, disposal, acquisition, use or consumption of natural gas, including LNG and re-gassified-LNG.

“The Central Government has assessed that the ongoing conflict in the Middle East has resulted in the disruption of liquefied natural gas shipments through the Strait of Hormuz and suppliers have invoked force majeure clause which would entail diversion of natural gas to the priority sectors,” says the order.

As per the order, priority sector one pertains to the supply of natural gas to Domestic Piped Natural Gas supply; Compressed Natural Gas for transport; LPG production including LPG shrinkage requirements and Pipeline compressor fuel and other essential pipeline operational requirements. These shall be treated as priority allocation and shall be maintained subject to operational availability to 100% of their average past six-month average gas consumption.

In priority sector two, the supply of natural gas to the fertilizer plants will have to ensure 70% of their past six-month average gas consumption, subject to operational availability.

In priority sector three, the gas marketing entities will have to ensure that gas supply to tea industries, manufacturing and other industrial consumers supplied through the national gas grid is maintained at 80% of their past six-month average gas consumption subject to operational availability.

In priority sector four, all city gas distribution entities will have to ensure that industrial and commercial consumers supplied through their networks receive 80% of their past six-month average gas consumption subject to operational availability.

This article went live on March tenth, two thousand twenty six, at fifty-eight minutes past eleven in the morning.

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