Centre introduces new LPG allocation formula amid Middle East tensions

The Centre has introduced a new LPG allocation formula to support key sectors amid Middle East tensions. Industries will receive up to 70 per cent of past consumption, with priority for units lacking gas alternatives and incentives for states adopting PNG reforms

New Delhi: Amid rising tensions in the Middle East, the Indian government on Wednesday introduced a new formula for LPG allocation aimed at supporting critical sectors such as pharmaceuticals, food processing, and agriculture.

According to the Ministry of Petroleum and Natural Gas, the revised policy will ensure bulk LPG supply to a wide range of industries, including pharma, food, polymers, agriculture, packaging, paints, steel, ceramics, glass, and aerosols.

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These sectors are considered essential for the country’s economic stability and supply chains.

Under the new formula, industries will receive up to 70 per cent of their LPG consumption levels recorded before March 2026.

However, the overall allocation has been capped at 0.2 thousand metric tonnes per day for the entire sector.

The government has clarified that priority will be given to factories where LPG cannot be replaced by natural gas.

In such cases, these units will receive LPG supply first to ensure uninterrupted production.

At the same time, industries are required to register with oil marketing companies and apply for piped natural gas (PNG) connections through city gas distribution firms.

However, this requirement has been relaxed for units where LPG is an essential part of the manufacturing process and cannot be substituted.

The Centre has also already allocated 70 per cent of packaged non-domestic LPG to states.

An additional 10 per cent allocation will be given to those states that implement reforms related to PNG adoption.

The government has asked states to take three key steps: circulate the Natural Gas and Petroleum Products Distribution Order 2026 among all departments, quickly utilise the reform-linked LPG allocation benefits, and notify policies related to compressed biogas at the earliest.

Earlier, the ministry reported a sharp rise in demand for smaller LPG cylinders. Since March 23, around 7.8 lakh 5-kg free trade LPG cylinders have been sold across the country.

On a single day earlier this week, sales crossed 1.06 lakh cylinders, compared to an average of about 77,000 per day in February.