In a development reminiscent of Covid-19 lockdowns, India’s hospitality industry is facing an acute LPG shortage, prompting the government to implement emergency measures to divert gas supplies from non-priority sectors to essential users. The crisis has led to widespread disruptions across hotels and restaurants from Tamil Nadu to Bangalore and Noida, with many establishments resorting to cutting down on fuel-intensive menu items or halting operations altogether.
The Centre’s intervention comes after disruptions in LNG shipments through the Strait of Hormuz, which has significantly impacted India’s gas supply. Currently, India imports around half of its daily gas consumption of approximately 195 million standard cubic meters (mmscmd), with about 60 mmscmd sourced from the Middle East prior to the Strait’s closure and Qatar’s force majeure declaration.
A government notification issued late Monday outlined a prioritized allocation system, with 100% gas supply allocated to households and automotive transport. Fertilizer plants will receive 70%, while tea industries, manufacturing, and other industrial consumers will be maintained at 80%. Small industrial and commercial consumers are also prioritized at 80%, but the hospitality sector has been hit hard.
Restaurants and Hotels at the Brink
Industry representatives warn of imminent shutdowns. Bert Mueller, founder of California Burrito, which operates over 100 outlets across Bengaluru, Chennai, Delhi, and Noida, stated, “We have LPG stock for just two days. We are working on contingency plans, including installing induction stoves in some outlets.”
The National Restaurant Association of India (NRAI) expressed grave concern, emphasizing the sector’s heavy reliance on commercial LPG. “Any disruption will lead to catastrophic closures,” the NRAI warned in a letter to the food processing ministry. The Federation of Hotel & Restaurant Associations of India echoed these fears, seeking urgent government intervention.
Several restaurants reported delays in LPG deliveries, with some running out of gas entirely. Manish V Shetty of Udupi Food Hub in Bengaluru said, “One of our restaurants did not receive gas cylinders today. Luckily, an older vendor helped us, but supplies are dwindling.” Others are attempting to stretch existing cylinders by reducing menu items, especially those like poori that consume more fuel.
Operational Challenges and Potential Closures
In Bangalore, hotelier P.C. Rao indicated that closures could be imminent if gas supplies are not restored. “We will operate as long as we have gas. If not, closures are unavoidable,” he said. Some establishments have already curtailed items like poori and fried rice to conserve gas, with efforts to maximize the usage of remaining cylinders.
Chandrashekhar Hebbar, another hotel owner, described the situation as serious and unsustainable in the long term. “We are trying to manage by reducing gas consumption, but after a day or two, it’s not feasible,” he remarked, highlighting the critical need for immediate government action.
Crisis Extends to Tamil Nadu
The crisis is equally severe in Tamil Nadu, where restaurants estimate LPG stocks will last only for one or two days. Several establishments, including popular chains, have limited their menus and stopped preparing fuel-heavy items. Sri Ananda’s in Chennai announced a reduction in menu items due to the supply shortage.
The Tamil Nadu Hotels Association appealed to the Centre on March 7 to revoke directives that suspended commercial LPG cylinders, warning of potential closures if supplies are not restored. The government’s emergency powers were invoked on March 6 to increase domestic LPG production amid rising prices, which saw hikes of Rs 60 for domestic cylinders and Rs 114.50 for commercial ones on March 7.
As the crisis deepens, the hospitality sector remains hopeful for a swift resolution, but many are already feeling the pinch of what some describe as a second lockdown scenario.
