Context
- The article examines India’s energy security challenges arising from its dependence on LPG imports amid escalating conflict in West Asia and associated supply disruptions.
- It analyses policy responses, structural constraints, and long-term alternatives.
Source: “India’s energy security is tethered to a war zone”, The Indian Express
LPG Dependence and Import Vulnerability
- High Import Reliance: India depends on imports for about 60% of LPG consumption, with over 90% of imports sourced from West Asia via the Strait of Hormuz
- Demand Structure: Households account for over 80% of LPG consumption, making domestic supply stability critical
- Rising Consumption Base: Expansion of LPG access has increased demand, with around 33 crore connections and over 10 crore PMUY beneficiaries
- Import Volume: India imported approximately 20.5 million metric tonnes of LPG in 2024
Impact of West Asia Conflict on Energy Security
- Infrastructure Targeting: Attacks on key facilities such as South Pars gas field and Ras Laffan have heightened instability
- Supply Uncertainty: Prospects of securing gas supplies from the region have weakened due to conflict escalation
- Market Instability: Increasing frequency of disruptions is contributing to volatility in global energy markets
Policy Response and Supply Prioritisation
- Household Priority: Government directed oil marketing companies to prioritise domestic LPG consumption over commercial use
- Legal Backing: Measures implemented under the Essential Commodities Act to maximise LPG availability
- Refinery Adjustments: Hydrocarbon streams redirected towards LPG production for domestic supply
- Commercial Restrictions: Regulation of commercial LPG to prevent hoarding and diversion
Consequences of Commercial Sector Deprioritisation
- Supply Shortages: Restaurants, hotels, and small eateries face LPG shortages due to restricted access
- Informal Market Growth: Emergence of black markets and resale at inflated prices
- Urban Impact: Closure of eateries and reduced operations affecting migrant workers, students, and low-income consumers
- Inequitable Outcomes: Policy intended to protect households creates uneven distributional effects
Demand-Side Distortion Due to Subsidy Structure
- Weak Price Signals: Subsidised household LPG reduces incentives to conserve or switch fuels during shortages
- Stable Demand Despite Scarcity: Consumption remains relatively unchanged even under constrained supply
- Disproportionate Burden: Commercial users bear the adjustment cost while household demand remains protected
Supply Diversification Efforts and Constraints
- Alternative Sourcing: India exploring imports from US, Norway, Canada, Algeria, and Russia
- Recent Agreements: Contracts signed with US suppliers for around 2.2 million metric tonnes of LPG
- Logistical Constraints: US shipments take up to 45 days compared to one week from West Asia, increasing costs
- Technical Constraints: India requires butane-heavy LPG blends, while US supplies are propane-heavy
- Infrastructure Gaps: Lack of blending infrastructure limits large-scale diversification
Infrastructure as a Medium-Term Solution
- Blending Facilities: Development of LPG blending infrastructure at Indian ports can enable diversified sourcing
- Time Lag: Infrastructure expansion requires several years and network integration
Long-Term Transition to Alternative Cooking Fuels
- Electric Cooking: Induction-based cooking emerging but lacks widespread adoption
- PNG Expansion: Around 1.36 crore PNG connections indicate scope for growth, especially in semi-urban areas
- Biogas Potential: Community and decentralised biogas systems suitable for rural regions
- Regional Strategy: Different fuel mixes needed across rural, semi-urban, and urban areas
- Structural Requirement: Alternatives need sustained investment, infrastructure, and policy support