Essential Commodities Act
Context:
The Union government recently invoked the Essential Commodities Act, 1955, in response to the blockade of the Strait of Hormuz
This blockade exposed the severe vulnerability of India's supply chain for imported cooking gas and natural gas.
The Act was used as an emergency tool to ensure the continuous availability of critical fuels for domestic households.
About the Essential Commodities Act, 1955:
The Act empowers the Union government to control the production, supply, and distribution of specific commodities to secure their equitable distribution and availability at fair prices.
Commodities covered under the Act include drugs, fertilizers, foodstuffs, edible oils, seeds, and fuels (including petroleum products and natural gas).
Section 3:
Under Section 3, the government can issue sweeping orders to maintain or increase supplies, prioritize production, set prices, impose stock limits, and prevent hoarding or black marketing.
Recent Directives:
The recent invocation of the Act resulted in two major regulatory actions concerning liquefied petroleum gas (LPG) and natural gas:
LPG Production and Supply:
The government directed private refiners to maximize domestic LPG production, overriding their existing petrochemical production commitments.
While this boosted domestic LPG output by at least 25%, a 50% supply gap remains to be met by imports.
To manage this, all produced LPG must be supplied exclusively to state-run oil marketing companies and is strictly prioritized for domestic households.
The severe de-prioritization of commercial kitchens has forced many restaurants, hotels, and hostels to limit their menus or shut down operations entirely.
Natural Gas (Supply Regulation) Order, 2026:
This order overrides existing contracts to establish a rigid priority-based allocation framework for natural gas distribution.
Top Priority (100% allocation): Piped natural gas (PNG) for households, compressed natural gas (CNG) for transport, gas needed for LPG production, and pipeline compressor fuel.
Lower Priorities:Fertilizer manufacturers are allocated 70% of their usual needs (subject to change during the upcoming kharif sowing season). Manufacturing and tea industries are capped at 80%.
Gas allocation to oil refineries has dropped to 65% of their usual needs, while petrochemical facilities run by ONGC, GAIL, and Reliance face partial or full curtailment of their LNG supply.