LPG supply steady in 2026 as govt boosts subsidy cover

What the government said on fuel prices and availability

India’s fuel supply position remains stable and petrol and diesel prices have not been raised, according to the Ministry of Petroleum and Natural Gas. Sujata Sharma, Joint Secretary at the ministry, told an inter-ministerial briefing that inventories are adequate and refineries are operating at peak capacity. She said India has the capacity to refine about 26 crore tonnes of crude oil annually.

The messaging followed visible queues and reports of panic buying at some retail outlets over the past two days. The ministry said there is sufficient petrol and diesel at pumps and at the terminals that supply them. It also urged consumers not to believe rumours and to avoid panic buying.

Panic buying, queues and the official response

Officials linked the queues to a demand surge rather than a physical shortage in the system. Petroleum Minister Hardeep Singh Puri told Parliament that household supply is protected and that the queue spike reflects “demand distortion, not a production or supply failure.” The government also said average delivery cycle times remain at about 2.5 days.

Alongside reassurance on availability, officials indicated that petrol and diesel prices will not be increased “for now,” with oil marketing companies (OMCs) expected to absorb cost pressure in the near term. The Centre said it is closely monitoring global oil markets and coordinating with suppliers on a daily basis.

LPG supply measures: extra allocation, small cylinders, enforcement

On LPG, Sharma said 22,000 tonnes of commercial LPG has been allocated across the country in recent days. She also said 30,000 five-kg cylinders were distributed on Tuesday, highlighting a push towards smaller packs when demand spikes.

The ministry also highlighted enforcement actions aimed at curbing diversion and illegal refilling. It said 2,700 raids were conducted, leading to the seizure of 2,000 cylinders. Separately, the government said Delivery Authentication Code (DAC) coverage is being expanded from 50 percent to 90 percent of consumers to close fraud and diversion loopholes.

Connection growth, shift to PNG, and booking performance

The ministry said that in the last roughly 25 days, about 2.5 lakh new LPG connections have been provided. It also said around 2.2 lakh consumers have shifted from LPG to piped natural gas (PNG). In addition, about 2.5 lakh new applications or registrations have been received.

On distribution performance, Sharma said there is no shortage at any LPG distributorship. She added that online booking is performing at around 92 percent.

Subsidy and budget signals: Ujjwala, PAHAL-DBT and FY27 allocations

Policy focus remains on keeping household LPG affordable, particularly for Pradhan Mantri Ujjwala Yojana (PMUY) beneficiaries. The government confirmed PMUY beneficiaries will continue to get a subsidy of ₹300 per 14.2 kg cylinder, for up to 9 refills per year, through Direct Benefit Transfer (DBT) to beneficiary bank accounts.

On allocations, the article text cited ₹9,200 crore for LPG connections to poor households and ₹1,500 crore for DBT payments to consumers under PAHAL. For DBT-PAHAL specifically, ₹1,500 crore has been allocated in FY 2026-27. In FY 2025-26, the budget allocation for DBT-PAHAL was ₹1,500 crore, which fell to ₹1,000 crore in the revised estimates.

The government also said LPG prices in India are linked to the Saudi Contract Price (SCP) benchmark, which has risen sharply over the past two months. Officials said domestic LPG currently costs OMCs around ₹1,050 per cylinder, implying losses on household LPG sales.

Low refill rates remain a key welfare concern

Separately, committee observations flagged that access to clean cooking fuel remains uneven because refill rates under Ujjwala are low. The Committee recommended increasing the subsidy to a level that makes refills affordable for poor households and encouraging issuance of five-kg and 10-kg cylinders.

The expectation, as cited, is that these changes would improve beneficiary coverage and enhance per capita consumption of LPG. As per the Ministry, refill consumption rate was 4.8 till August 25, 2025.

Storage reality check: crude buffers vs LPG buffers

The article text highlighted a structural gap between crude oil preparedness and LPG preparedness. India’s strategic LPG storage capacity, even after the commissioning of HPCL’s Mangalore underground cavern in late 2025, was cited at roughly 1,40,000 tonnes, equivalent to about five days of national demand.

In contrast, officials told Parliament that India currently has total storage capacity for crude oil and petroleum products for 74 days. Another official briefing cited more than 250 million barrels of crude oil and petroleum products across strategic reserves and supply chains, equivalent to about seven to eight weeks of consumption.

Financial support to OMCs and pricing constraints

To cushion consumers during global disruptions, the government has scaled up support for OMCs. The text cited approved OMC compensation for under-recovery losses at ₹30,000 crore, and a separate confirmed OMC support package of ₹17,500 crore.

It also cited that OMC compensation of ₹30,000 crore has been approved against losses of about ₹40,000 crore in 2024-25. The central tension described is that keeping retail LPG affordable compresses OMC margins during periods of high global prices, which can affect the ability to fund infrastructure such as storage, bottling plants and last-mile logistics.

Price moves in LPG even as petrol, diesel remain unchanged

While the government has repeatedly stated that petrol and diesel prices will not rise, LPG has seen an increase. Government sources cited that the 14.2-kg domestic LPG cylinder price has been raised by ₹60 and the 19-kg commercial cylinder now costs ₹115 more, with revised rates effective from Saturday, March 7.

Officials also compared regional prices, citing equivalent LPG prices at ₹1,046 in Pakistan, ₹1,242 in Sri Lanka and ₹1,208 in Nepal.

Key data points at a glance

Why the story matters for investors and the energy chain

For listed OMCs, the updates matter because they combine three moving parts: global price-linked procurement, managed retail pricing, and budget-funded compensation. The reported domestic LPG cost of about ₹1,050 per cylinder, alongside capped consumer pricing and continued DBT support, indicates that government policy will remain central to OMC earnings during volatile periods.

For households, the focus remains on preventing abrupt price shocks while improving effective access. The committee’s emphasis on refill affordability, plus the push for smaller cylinders, signals that consumption and welfare outcomes will be judged not only by connection counts but by refill behaviour.

What to watch next

Government sources said an Inter-Ministerial Group (IMG) is monitoring the situation and reviewing domestic supply priorities to ensure uninterrupted availability. The ministry also said domestic refineries were directed to maximise LPG output, claiming a 28 percent boost through emergency refinery rerouting, and that emergency procurement from the US Gulf Coast has been initiated.

Near-term attention will stay on execution: cylinder availability at distributors, the impact of DAC expansion on diversion, and how quickly subsidy outgo and OMC compensation adjust if the gap between subsidised and non-subsidised LPG prices changes further.