What Happened
- The Government of India has decided to raise natural gas supply to fertiliser units and other industries to 90% of their average consumption from April 2026, up from the previous 70-80% allocation.
- The move aims to stabilise domestic fertiliser production amid global supply disruptions linked to the ongoing West Asia conflict and the effective closure of the Strait of Hormuz.
- LNG shipments through the Strait have been severely disrupted since February 2026, forcing the government to invoke the Essential Commodities Act, 1955 and issue the Natural Gas (Supply Regulation) Order, 2026.
- The enhanced allocation follows parliamentary discussions where the government confirmed that fertiliser plants had been receiving approximately 80% of their average past consumption through the Empowered Pool Management Committee's procurement of additional 7.31 MMSCMD.
Static Topic Bridges
Natural Gas (Supply Regulation) Order, 2026
The Government of India, invoking powers under the Essential Commodities Act, 1955, notified the Natural Gas (Supply Regulation) Order on 9 March 2026. This Order establishes a four-tier priority framework for natural gas allocation, overriding all existing Gas Sale Agreements (GSAs) and commercial contracts. It represents an extraordinary government intervention in the gas market, triggered by the disruption of LNG supplies due to the Strait of Hormuz crisis.
- Priority Sector I (100% allocation): Domestic PNG (piped natural gas), CNG for transport, LPG production — "no-cut" category
- Priority Sector II (70% allocation, now being raised to 90%): Fertiliser plants
- Priority Sector III (80%): Industrial consumers on national gas grid (including tea manufacturing)
- Priority Sector IV (80%): Industrial and commercial consumers on City Gas Distribution (CGD) networks
- Curtailment sources: Petrochemical facilities and power plants face reduced allocations; refineries cut to ~65%
- Implementation: Coordinated by GAIL (Gas Authority of India Limited) with PPAC (Petroleum Planning and Analysis Cell)
- Legal basis: Essential Commodities Act, 1955 — Section 3 empowers the Centre to control production, supply, and distribution of essential commodities
Connection to this news: The increase from 70-80% to 90% for fertiliser units signals the government's success in securing additional gas supplies and its priority to maintain fertiliser production ahead of the Kharif sowing season.
India's Fertiliser Sector and Gas Dependency
India's fertiliser sector is the second-largest consumer of natural gas after the power sector, using approximately 30-35% of the country's total gas consumption. Urea production, which constitutes the bulk of India's fertiliser output, uses natural gas as both feedstock (for producing hydrogen via steam reforming) and fuel. India is the world's second-largest producer and consumer of urea, yet it still imports approximately 30% of its annual urea requirement.
- India's urea production capacity: approximately 31 million tonnes per annum (from 33 plants)
- Annual urea consumption: approximately 35-36 million tonnes; imports fill the gap of ~7-9 million tonnes
- Gas requirement for urea: approximately 0.75-0.80 MMBTU per kg of urea (energy norm)
- Administered Price Mechanism (APM) gas: Domestically produced gas sold at government-regulated prices — approximately 60% of domestic gas production (~92 MMSCMD)
- Kirit Parikh Committee (2022): Recommended linking APM gas prices to 10% of Indian crude basket, with floor of $4/mmBtu and ceiling of $6.5/mmBtu; adopted in April 2023
- New Urea Policy (NUP) 2015: Governs energy norms and subsidy payments for urea manufacturers
- Neem-coated urea: Made mandatory in 2015 to reduce misuse and diversion
Connection to this news: Any disruption in gas supply to fertiliser units directly threatens food security, as urea is the most widely used nitrogenous fertiliser in India. The government's decision to raise allocation to 90% ahead of the Kharif season reflects this food-energy security nexus.
Essential Commodities Act, 1955
The Essential Commodities Act (ECA), 1955 empowers the Central Government to regulate the production, supply, and distribution of commodities it declares essential. The Act has been invoked during various crises to control prices and ensure availability of critical goods. It was amended in 2020 through the Essential Commodities (Amendment) Act to deregulate agricultural produce (cereals, pulses, oilseeds, edible oils, onions, potatoes), but the Centre retains power to reimpose controls under extraordinary circumstances.
- Original enactment: 1955; key provision: Section 3 (power to control production, supply, distribution)
- 2020 Amendment: Removed cereals, pulses, oilseeds, edible oils, onion, potato from ECA regulation — stock limits only if prices surge 100% for horticultural products or 50% for non-perishables
- Natural gas was included as an essential commodity through a notification
- Penalties: imprisonment up to 7 years; or fine; or both (enhanced by the 2020 amendment)
- The ECA has been invoked for natural gas regulation during the Hormuz crisis — possibly the first such invocation for this commodity in recent decades
Connection to this news: The invocation of the ECA for natural gas supply regulation is a significant step, demonstrating the severity of the supply crisis and the government's readiness to use extraordinary legal powers to protect critical sectors like fertiliser production.
Key Facts & Data
- Gas supply to fertiliser units raised to 90% (from 70% initially, then 80%) from April 2026
- Natural Gas (Supply Regulation) Order: notified 9 March 2026 under ECA, 1955
- India's urea production: ~31 million tonnes/year from 33 plants; imports: ~7-9 million tonnes/year
- APM gas constitutes ~60% of domestic gas production (~92 MMSCMD)
- Kirit Parikh Committee: floor $4/mmBtu, ceiling $6.5/mmBtu (linked to 10% of crude basket)
- Additional gas procured: 7.31 MMSCMD through Empowered Pool Management Committee
- Four-tier priority framework: PNG/CNG (100%) > Fertiliser (90%) > Industry (80%) > CGD (80%)