Hotels, Restaurants to Shut Ops on LPG Supply Stoppage
The government has increased the minimum waiting period for billing cylinders for domestic consumers to 25 days
Chennai: Hotels and restaurants across the country are likely to stop their services in a few days as the oil distribution companies have halted supply of LPG cylinders for commercial operations following a government notification to prioritize domestic supply. Meanwhile, the government has increased the minimum waiting period for billing cylinders for domestic consumers to 25 days.
In the notification, which increased the billing period to 25 days, the government had asked distribution companies to prioritize domestic supply. Following this, the distributors have stopped supplying to commercial firms like hotels and restaurants.
“Most of the restaurants across the country have fuel stocks that would last for two-three days. If the government does not resume the supply, restaurants and hotels will have shut their operations,” said Pradeep Shetty, president, FHRAI.
“We have been trying to meet to inform the ministry about our situation,” he added. According to him, there are millions of people who rely on restaurants for their daily food. Further hotels have guests who need to be fed. India consumes some 31.3 million tonnes of LPG annually and of this major portion goes to households.
Even for domestic supply, the billing period has been extended to 25 days. According to reports, this is intended to prevent hoarding and black marketing as the Iran crisis is forcing people to book cylinders much earlier than usual.
Last week, the companies had increased the LPG prices by Rs 60 per cylinder for domestic consumers.
Non-subsidised LPG for households was raised to Rs 928 per 14.2 kg cylinder in Chennai as against Rs 868 previously, according to the Indian Oil Corporation (IOC) website.
The rates for Ujjwala Yojana beneficiaries also have been raised by a similar amount. They will now pay Rs 628 per 14.2 kg cylinder after accounting for a subsidy of Rs 300 per bottle they get for up to 12 refills in a year. The previous rate was Rs 568 per cylinder.
The price of a 19 kg cylinder in Chennai has gone up to Rs 2043 as of March 7 from Rs 1929 on March 1. Prices are likely to further increase if the crude prices continue to go up.
“We procure a maximum quantity of LPG from outside. We are importing that, particularly from Saudi Arabia. If there is a disruption on the Strait of Hormuz, then that supply gets impacted and that will hit the consumption of the common man. Government has asked refineries to reprioritize and use propane and butane to produce more LPG domestically,” said Sumit Pokharna, Vice President – Fundamental Research at Kotak Securities.
India imports 80-85 per cent of the LPG it consumes, making it the world's second-largest LPG importer after China. Almost all those shipments come from Gulf producers like Qatar, Saudi Arabia, the UAE and Kuwait and nearly all pass through the Strait of Hormuz.
