Govt invokes Essential Commodities Act to Divert Natural Gas to Priority Sectors

The government has invoked the Essential Commodities Act to regulate the supply and distribution of natural gas and divert it to priority sectors following disruptions in liquefied natural gas shipments amid the ongoing conflict in the Middle East.

In a notification issued by the Ministry of Petroleum and Natural Gas, the Centre said shipments through the Strait of Hormuz have been disrupted, with suppliers invoking force majeure, prompting the need to ensure adequate gas availability for critical sectors.

Under the order, natural gas will be diverted to priority sectors including domestic piped natural gas supply, compressed natural gas used in transport, LPG production, and essential pipeline operations, with supplies to these segments maintained at up to 100% of their average consumption over the past six months.

Fertiliser plants have been placed in the second priority category and will be assured gas supply of up to 70% of their six-month average consumption, provided the fuel is used exclusively for fertiliser production.

Industrial consumers such as manufacturing units and tea industry supplied through the national gas grid will receive around 80% of their past six-month average consumption, while city gas distribution networks will ensure similar levels of supply for industrial and commercial consumers.

To ensure these allocations, gas supplies to petrochemical facilities and power plants may be partially or fully curtailed, while refineries may have to reduce gas usage to around 65% of their recent consumption levels, the notification said.

The government has directed all entities involved in the production, import, transportation and marketing of natural gas, including ONGC, RIL, Oil India, Vedanta, GAIL, LNG terminal operators, pipeline operators and city gas distributors, to comply with revised supply schedules and sectoral allocations. 

GAIL, in coordination with the Petroleum Planning and Analysis Cell (PPAC), will oversee implementation of the diversion mechanism and manage pooled pricing for gas shifted from non-priority sectors to priority sectors.

The order will override existing gas sale agreements and other commercial arrangements to ensure equitable distribution and continued availability of natural gas to essential sectors during the supply disruption.