Gas curbs hit Gujarat factories; Centre secures LPG supply amid West Asia conflict

Gas curbs hit Gujarat factories; Centre secures LPG supply amid West Asia conflict

Gas curbs hit Gujarat factories; Centre secures LPG supply amid West Asia conflict

Gujarat factories scale down amid gas shortages; authorities permit alternate fuels while the Centre secures LPG for domestic use amid West Asia conflict

Published on: Mar 15, 2026 7:47 PM IST By Maulik Pathak, Ahmedabad Share via Copy link A disruption in imported natural gas supplies, triggered by constraints on energy shipments through the Strait of Hormuz amid the ongoing West Asia conflict, has led to curbs on industrial gas consumption in Gujarat, forcing several factories to scale down production even as authorities allow temporary use of alternate fuels and the Centre moves to secure LPG supplies for households. Gas supply cuts in Gujarat force factories to scale back output; Centre allows alternate fuels and moves to secure LPG for households (Parveen Kumar/Hindustan Times) The impact is being felt across several gas-intensive sectors, including ceramics, textiles, glass and chemicals. In the Morbi ceramic manufacturing cluster, more than 100 factories that rely on natural gas to run their kilns have shut down production following the reduction in gas supplies. In Surat, one of the country’s largest textile hubs, thousands of units rely on natural gas for boilers and heating processes. “There are around 55,000 textile units in Surat, of which around 12,000 run on gas. So far, the crisis is not very severe. We have urged the state government to act against those involved in black marketing of LPG cylinders. The industry can be impacted if the war lasts long and no solution is found,” said Ashok Jirawala, president of the Federation of Gujarat Weavers’ Welfare Association. Also Read: LPG shortage hits Bengal: IIT Kharagpur switches to firewood; hosp, govt canteens alter menus Some industries have already adjusted production levels following the curbs. In the Vatwa industrial estate on the outskirts of Ahmedabad, which houses more than 250 chemical manufacturing units, several factories have scaled down output. Similar adjustments have been reported from textile processing units and glass factories in South Gujarat. Almost a fourth of India’s natural gas requirements has been impacted by force majeure conditions enforced by foreign suppliers because of the West Asia conflict, and the government is procuring supplies through alternative routes to overcome the shortfall. Nearly 50% of India’s oil imports pass through the Strait of Hormuz, the crucial waterway that has effectively been shut by Iran following the start of its conflict with Israel and the US. Fuel and gas prices have surged, heightening worries in India, which depends on imports to meet around 85% of its energy needs. Centre prioritises household gas, transport fuel These curbs follow the Union ministry of petroleum and natural gas’s notification on March 9 of the Natural Gas (Supply Regulation) Order, 2026 under the Essential Commodities Act to regulate natural gas allocation across sectors amid supply disruptions linked to the Middle East conflict. The order directs that available natural gas be supplied on a priority basis to essential sectors including piped natural gas for households, compressed natural gas used in transport and LPG production. Under the order, these sectors will receive up to 100% of their average consumption to ensure uninterrupted cooking gas supply and transport fuel availability. Manufacturing industries and other industrial consumers connected to the national gas grid are expected to receive around 80% of their past six-month average consumption, subject to availability, while fertiliser plants will receive about 70% of their past six-month average consumption. Also Read: Goa fishing trips halted as LPG shortage hits trawlers amid West Asia conflict However, industry officials said the order does not clearly specify the quantum of gas allocation for gas-based power plants, leaving utilities to manage operations depending on available supplies. Sector officials alleged that the implementation of the March 9 order has not yet fully stabilised. GAIL (India) Ltd has sought to coordinate the available gas supplies. Several city gas distribution companies have said that they will implement allocations as per the central framework but have not yet formally communicated revised supply quantities to industrial customers. Gas-based power plants may remain underutilised Gujarat Gas Limited, the country’s largest city gas distribution company, had earlier informed stock exchanges that the availability of regasified liquefied natural gas had become constrained due to the West Asia conflict. Consequently, it issued force majeure notices restricting daily contracted quantities of gas to industrial customers from March 6 under existing gas supply agreements. “Acts of War is not covered under the Insurance taken by Gujarat Gas Limited. The likely impact of Force Majeure which is currently an ongoing event cannot be estimated at this point of time. The Company is closely monitoring the developments and will keep the stock exchanges informed of any material updates in this regard,” the company said in its March 4 statement. Across its 27 city gas distribution licences spread across six states and one union territory, Gujarat Gas supplies piped natural gas to around 4,500 factories, including ceramic manufacturing units in Morbi and several industries across Gujarat. Many of these units operate in gas-intensive sectors such as ceramics, glass, paper, textiles and chemicals. According to the Petroleum Planning and Analysis Cell (PPAC), Gujarat has the largest concentration of industries using piped natural gas in the country. As of January 2026, the state had 5,895 factories out of a total of 21,373 factories in India using PNG for manufacturing processes. Similarly, of the 48,157 commercial establishments using PNG in India, more than 24,472 businesses are located in Gujarat, reflecting the state’s extensive city gas distribution network. Adani Total Gas Ltd (ATGL) has revised pricing for excess natural gas supplied to certain industrial customers, cutting the price to ₹82.95 per standard cubic metre (SCM) from ₹119.90 per SCM, effective from March 16, to pass on lower upstream prices during the current supply constraints. Following disruptions to LNG supplies linked to the halt in movement of ships through the Strait of Hormuz, ATGL had earlier asked commercial and industrial customers to curtail consumption to 40% of their contracted volumes. Power sector faces limited gas availability The tightening gas availability has also drawn attention to gas-based power generation in the state. India has about 20,000 MW of installed gas-based power generation capacity, of which roughly 25–30% is located in Gujarat. Much of this capacity has remained underutilised in recent years because imported LNG has often been too expensive for power generation to remain viable. A June 2025 report by the Institute for Energy Economics and Financial Analysis (IEEFA) noted that 31 gas-based plants with a combined capacity of about 8 GW generated no electricity during FY2025, effectively remaining stranded. About 5.3 GW of this idle capacity was retired in April 2025, while the remaining fleet has been operating at plant load factors of around 14–17%. Gujarat Urja Vikas Nigam Limited (GUVNL), the state power utility, has been running gas-based plants only when required, a senior government official said. GUVNL’s generation arm has an installed gas-based capacity of about 1,800 MW, but the plants operate at plant load factors of around 20–30% and are often shut when not required, the official added. They are mainly used during peak evening hours when solar generation declines and electricity demand rises during the summer. Also Read: LPG shortage hits hotels, eateries, schools in Uttarakhand amid West Asia conflict “The gas-based power plants in the country require about 70 million MMBtu of gas, while currently there is supply of only around 15 million MMBtu. The government’s March 9 order places gas-based power plants in the lowest priority category and as a result these plants may not operate fully. Many of them were already stranded due to viability issues,” said an official working with a leading city gas distribution company. To help industries manage the situation, the Gujarat Pollution Control Board (GPCB) issued a circular on March 5 allowing industries dependent on gas-based utilities to temporarily switch to approved fuels where gas supply has fallen. The relaxation will remain in force for three months, after which the board will review the situation. Separately, the Union government has also taken steps to secure cooking fuel supply. On March 5, the Ministry of Petroleum and Natural Gas directed oil refineries to maximise the use of propane and butane streams for the production of liquefied petroleum gas and supply it to public sector oil marketing companies for distribution to domestic consumers. Gujarat Check India news real-time updates, latest news from India, latest at HindustanTime News / India News / Gas Curbs Hit Gujarat Factories; Centre Secures LPG Supply Amid West Asia Conflict See Less

A disruption in imported natural gas supplies, triggered by constraints on energy shipments through the Strait of Hormuz amid the ongoing West Asia conflict, has led to curbs on industrial gas consumption in Gujarat, forcing several factories to scale down production even as authorities allow temporary use of alternate fuels and the Centre moves to secure LPG supplies for households.

The impact is being felt across several gas-intensive sectors, including ceramics, textiles, glass and chemicals. In the Morbi ceramic manufacturing cluster, more than 100 factories that rely on natural gas to run their kilns have shut down production following the reduction in gas supplies.

In Surat, one of the country’s largest textile hubs, thousands of units rely on natural gas for boilers and heating processes. “There are around 55,000 textile units in Surat, of which around 12,000 run on gas. So far, the crisis is not very severe. We have urged the state government to act against those involved in black marketing of LPG cylinders. The industry can be impacted if the war lasts long and no solution is found,” said Ashok Jirawala, president of the Federation of Gujarat Weavers’ Welfare Association.

Also Read: LPG shortage hits Bengal: IIT Kharagpur switches to firewood; hosp, govt canteens alter menus

Some industries have already adjusted production levels following the curbs. In the Vatwa industrial estate on the outskirts of Ahmedabad, which houses more than 250 chemical manufacturing units, several factories have scaled down output. Similar adjustments have been reported from textile processing units and glass factories in South Gujarat.

Almost a fourth of India’s natural gas requirements has been impacted by force majeure conditions enforced by foreign suppliers because of the West Asia conflict, and the government is procuring supplies through alternative routes to overcome the shortfall.

Nearly 50% of India’s oil imports pass through the Strait of Hormuz, the crucial waterway that has effectively been shut by Iran following the start of its conflict with Israel and the US. Fuel and gas prices have surged, heightening worries in India, which depends on imports to meet around 85% of its energy needs.

Centre prioritises household gas, transport fuel

These curbs follow the Union ministry of petroleum and natural gas’s notification on March 9 of the Natural Gas (Supply Regulation) Order, 2026 under the Essential Commodities Act to regulate natural gas allocation across sectors amid supply disruptions linked to the Middle East conflict.

The order directs that available natural gas be supplied on a priority basis to essential sectors including piped natural gas for households, compressed natural gas used in transport and LPG production.

Under the order, these sectors will receive up to 100% of their average consumption to ensure uninterrupted cooking gas supply and transport fuel availability. Manufacturing industries and other industrial consumers connected to the national gas grid are expected to receive around 80% of their past six-month average consumption, subject to availability, while fertiliser plants will receive about 70% of their past six-month average consumption.

Also Read: Goa fishing trips halted as LPG shortage hits trawlers amid West Asia conflict

However, industry officials said the order does not clearly specify the quantum of gas allocation for gas-based power plants, leaving utilities to manage operations depending on available supplies.

Sector officials alleged that the implementation of the March 9 order has not yet fully stabilised. GAIL (India) Ltd has sought to coordinate the available gas supplies. Several city gas distribution companies have said that they will implement allocations as per the central framework but have not yet formally communicated revised supply quantities to industrial customers.

Gas-based power plants may remain underutilised

Gujarat Gas Limited, the country’s largest city gas distribution company, had earlier informed stock exchanges that the availability of regasified liquefied natural gas had become constrained due to the West Asia conflict. Consequently, it issued force majeure notices restricting daily contracted quantities of gas to industrial customers from March 6 under existing gas supply agreements.

“Acts of War is not covered under the Insurance taken by Gujarat Gas Limited. The likely impact of Force Majeure which is currently an ongoing event cannot be estimated at this point of time. The Company is closely monitoring the developments and will keep the stock exchanges informed of any material updates in this regard,” the company said in its March 4 statement.

Across its 27 city gas distribution licences spread across six states and one union territory, Gujarat Gas supplies piped natural gas to around 4,500 factories, including ceramic manufacturing units in Morbi and several industries across Gujarat. Many of these units operate in gas-intensive sectors such as ceramics, glass, paper, textiles and chemicals.

According to the Petroleum Planning and Analysis Cell (PPAC), Gujarat has the largest concentration of industries using piped natural gas in the country. As of January 2026, the state had 5,895 factories out of a total of 21,373 factories in India using PNG for manufacturing processes.

Similarly, of the 48,157 commercial establishments using PNG in India, more than 24,472 businesses are located in Gujarat, reflecting the state’s extensive city gas distribution network.

Adani Total Gas Ltd (ATGL) has revised pricing for excess natural gas supplied to certain industrial customers, cutting the price to ₹82.95 per standard cubic metre (SCM) from ₹119.90 per SCM, effective from March 16, to pass on lower upstream prices during the current supply constraints.

Following disruptions to LNG supplies linked to the halt in movement of ships through the Strait of Hormuz, ATGL had earlier asked commercial and industrial customers to curtail consumption to 40% of their contracted volumes.

Power sector faces limited gas availability

The tightening gas availability has also drawn attention to gas-based power generation in the state.

India has about 20,000 MW of installed gas-based power generation capacity, of which roughly 25–30% is located in Gujarat. Much of this capacity has remained underutilised in recent years because imported LNG has often been too expensive for power generation to remain viable.

A June 2025 report by the Institute for Energy Economics and Financial Analysis (IEEFA) noted that 31 gas-based plants with a combined capacity of about 8 GW generated no electricity during FY2025, effectively remaining stranded. About 5.3 GW of this idle capacity was retired in April 2025, while the remaining fleet has been operating at plant load factors of around 14–17%.

Gujarat Urja Vikas Nigam Limited (GUVNL), the state power utility, has been running gas-based plants only when required, a senior government official said. GUVNL’s generation arm has an installed gas-based capacity of about 1,800 MW, but the plants operate at plant load factors of around 20–30% and are often shut when not required, the official added. They are mainly used during peak evening hours when solar generation declines and electricity demand rises during the summer.

Also Read: LPG shortage hits hotels, eateries, schools in Uttarakhand amid West Asia conflict

“The gas-based power plants in the country require about 70 million MMBtu of gas, while currently there is supply of only around 15 million MMBtu. The government’s March 9 order places gas-based power plants in the lowest priority category and as a result these plants may not operate fully. Many of them were already stranded due to viability issues,” said an official working with a leading city gas distribution company.

To help industries manage the situation, the Gujarat Pollution Control Board (GPCB) issued a circular on March 5 allowing industries dependent on gas-based utilities to temporarily switch to approved fuels where gas supply has fallen. The relaxation will remain in force for three months, after which the board will review the situation.

Separately, the Union government has also taken steps to secure cooking fuel supply. On March 5, the Ministry of Petroleum and Natural Gas directed oil refineries to maximise the use of propane and butane streams for the production of liquefied petroleum gas and supply it to public sector oil marketing companies for distribution to domestic consumers.

Source: HindustanTimes
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