Why The Centre Invoked The Essential Commodities Act Amid West Asia Gas Disruptions

The Union government has invoked the Essential Commodities Act, 1955 to regulate the supply and distribution of natural gas following disruptions linked to the escalating conflict in West Asia.

The Ministry of Petroleum and Natural Gas issued an order on 9 March stating that it had become necessary to regulate production, sector-wise allocation and consumption of natural gas, including liquefied natural gas (LNG) and re-gasified LNG, to ensure supplies remain available for critical sectors.

According to news reports citing the order, the government assessed that the ongoing conflict in West Asia had disrupted LNG shipments passing through the Strait of Hormuz, a key global energy shipping route. Suppliers have reportedly invoked force majeure clauses, leading to the diversion of shipments and tightening supply.

The government said regulating gas distribution would help maintain “equitable distribution and continued availability of natural gas for priority sectors”.

Under the order, the Centre has classified consumers into four priority categories. The first sector with 100 per cent supply includes domestic piped natural gas (PNG) supply, compressed natural gas (CNG) used in transport, LPG production requirements, and pipeline compressor fuel and other essential operational needs These sectors will continue to receive 100 percent of their average consumption over the past six months, subject to operational availability.

The second sector includes fertiliser units which will receive at least 70 per cent of their average gas consumption over the past six months. The third sector will receive 80 per cent of their average six-month consumption and includes grid-connected industries such as tea manufacturing and other industrial users supplied through the national gas grid. Finally, the fourth sector includes industrial and commercial consumers supplied through city gas distribution networks who will also receive around 80 percent of their recent average. 

In a related move earlier this month, the Centre directed oil refining companies to maximise production of Liquefied Petroleum Gas and prioritise its supply for domestic households. Public sector oil marketing companies including Indian Oil Corporation, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited, were instructed to prioritise the use of propane and butane streams for LPG production and avoid diverting them to petrochemical manufacturing. Together, these companies supply cooking gas to about 99 percent of Indian households, making the measure crucial to maintaining domestic energy availability.

What Is The Essential Commodities Act?

It is a law that empowers the Union government to regulate the production, supply, distribution and trade of goods considered vital for everyday life. The Act allows the government to take emergency steps, such as controlling production levels, fixing supply limits or imposing stock limits, if necessary to ensure availability, prevent hoarding and maintain price stability.

Historically, the law has been used primarily to control shortages of food commodities like wheat, rice, pulses and edible oils. In 2020, Parliament amended the law to reduce the government’s ability to impose stock limits on agricultural commodities, restricting such interventions to extraordinary situations such as war, famine, severe price rises or natural disasters.

The current order states that natural gas falls under petroleum products, which are listed as essential commodities under the Act. This interpretation draws on a Supreme Court ruling in Association of Natural Gas v. Union of India (Special Reference No. 1 of 2001), which clarified that natural gas and LNG are petroleum products.

Because petroleum products are covered under the Act, the Centre can regulate their supply and distribution during disruptions.

By invoking the law, the government can redirect gas supplies to priority sectors, manage shortages and prevent disruption to critical services such as household cooking gas, public transport and fertiliser production.

When did the government invoke the act before this?

Previously, the government has invoked the Act several times in recent years to manage supply shocks or price spikes. Most recently, in August 2025, the Centre reduced wheat stock limits for traders and retailers to moderate rising prices ahead of the festive season. Before that, in 2023, it was invoked to tighten wheat stock limits amid concerns about hoarding and price increase, in 2022, to monitor tur dal stocks and cap sugar exports to stabilise domestic prices, and in 2020, the act was invoked during the COVID-19 lockdown to prevent hoarding and ensure availability of essential goods.