India Boosts Refinery Production Amid Persistent LPG Shortage

India has increased production of Liquefied Petroleum Gas (LPG) to manage supply disruptions linked to the conflict in Iran, as per The Bloomberg report.  

Refinery output has risen by over 20% since February to around 46,000 tonnes a day. This is expected to reach 50,000 tonnes daily once maintenance at Nayara Energy Ltd. is completed in May. 

The rise in output has narrowed the gap, though it remains below pre-crisis demand of about 100,000 tonnes a day. 

Imports Rerouted and Expanded 

To supplement domestic production, refiners have secured about 650,000 tonnes of LPG for May, equivalent to roughly 21,000 tonnes a day. A large share of these supplies is coming from the United States, with shipments expected to touch record levels. 

State-run companies including Indian Oil Corp. and Bharat Petroleum Corp. have also purchased spot cargoes for May and June delivery. Some shipments are being redirected away from the Strait of Hormuz due to disruptions in transit. 

Rationing to Protect Household Supply 

With availability under pressure, LPG supplies to commercial users have been reduced to about 70% of normal levels. The government has prioritised household consumption, resulting in longer waiting periods for cylinder refills in several regions. 

At the same time, authorities have encouraged a shift towards piped natural gas and permitted temporary use of coal and kerosene under relaxed environmental rules. 

Limited Substitution Options 

India has around 334 million LPG users following years of expansion in clean cooking fuel access. In comparison, piped gas connections stand at just over 17 million, increasing by roughly 10,000 a day. The pace of transition has remained gradual, limiting immediate substitution. 

Impact Across Sectors 

The shortage has affected both households and small businesses. Restaurants have scaled back operations, while demand for alternative cooking appliances has increased. 

Authorities have conducted nearly 150,000 inspections to address hoarding and overpricing. These actions have resulted in arrests and penalties for distributors. 

Read More: RBI Flags Stronger WALR Transmission by Private Banks Than PSBs! 

Conclusion 

Higher refinery output and additional imports have provided partial relief. However, supply remains below earlier levels, and availability is likely to stay constrained until import routes stabilise. 

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