The government on Tuesday invoked the Essential Commodities Act, 1955, a law that allows authorities to regulate the production, supply and distribution of essential commodities, news agency ANI reported. The move comes amid a global energy crisis after Iran closed the Strait of Hormuz amid the ongoing war with the United States.
India currently has about 332 million active LPG consumers, making the stability of cooking gas supplies a major concern for households and businesses alike, according to Reuters.
The move comes at a time when several major hoteliers’ associations in Mumbai, Bengaluru and Chennai have reported a shortage of commercial LPG cylinders.
Below is a detailed explanation of what the law means and why the government has implemented it now.
What is the Essential Commodities Act, 1955?
The Essential Commodities Act (ECA) was introduced to ensure goods vital to everyday life remain available to the public.
If the supply of these goods is disrupted, this may affect the daily lives of citizens. To prevent this, the law enables the government to intervene and manage supplies of goods deemed “essential.”
These usually include:
- Foodstuffs
- Fertilizers
- Drugs
- Fuel and energy products
What powers does the government have under the law?
The most important authority under the law comes from Section 3 of the law, which gives the Center broad powers to regulate essential commodities.
Under these powers, the government can:
- Control the production or refining of commodities if necessary
- Organizing supply and distribution across different states
- Fixing prices or imposing maximum price limits to keep goods accessible to everyone
- Establish inventory limits for dealers, wholesalers and retailers to prevent hoarding
In fact, the law allows the government to enter the market and manage supply chains when normal market mechanisms fail to ensure availability.
Why did the government resort to the law now?
The immediate reason is the interruption of LPG imports due to the conflict in the Middle East.
India is the second largest importer of LPG in the world, consuming 33.15 million metric tons last year. A large portion of this demand is met through imports.
More than 80% of these imports pass through the Strait of Hormuz, a critical sea route for global energy trade.
However, ship movements through the strait have virtually stopped after tensions escalated in the region. The conflict erupted on February 28 when the United States and Israel carried out joint strikes against Iran.
With cross-strait shipping disrupted, the impact is now being felt in India’s fuel supply chain.
Which sectors will receive priority in gas supplies?
According to the government order, priority will be given to natural gas supplies to sectors that are vital for daily consumption and basic infrastructure.
These include:
- Domestic pipelined natural gas (PNG) supply.
- Compressed natural gas (CNG) used in transportation
- LPG production, including LPG shrinkage requirements
- Pipeline compressor fuel
- Other basic operational requirements for pipelines
(With inputs from agencies)
