LPG shortage linked to Iran war threatens restaurant operations across India

Restaurants and hotels across India warned of disruptions and possible shutdowns on Tuesday as the war involving Iran has tightened supplies of cooking gas, prompting authorities to set up a panel to review requests from the industry.

The shortage follows disruptions in the Gulf after the U.S.-Israel war on Iran halted ship traffic in the Gulf and the Strait of Hormuz. The conflict has driven up energy prices and transport costs, affecting exports and output from Gulf producers such as Qatar and Saudi Arabia.

India, the world’s second-biggest importer of liquefied petroleum gas (LPG), invoked emergency powers last week and ordered refiners to increase production for domestic use. The move has left the hospitality sector struggling to secure sufficient supplies.

“We have LPG stock for two days. We are working on contingencies,” said Bert Mueller, founder of Mexican food chain California Burrito, which operates more than 100 stores from Bengaluru and Chennai in the south to Delhi and Noida in the north.

“We are conserving gas and installing induction stoves at certain stores.”

The oil ministry said it has set up a panel to examine requests for LPG supplies from restaurants and other industries after appeals from two industry bodies.

“The restaurant industry is predominantly dependent on commercial LPG for its operations,” the National Restaurant Association of India, which represents more than half a million restaurants, said in a letter to the food processing ministry on Monday.

“Any disruption therein will lead to a catastrophic closure,” the NRAI said.

Another industry body, the Federation of Hotel & Restaurant Associations of India, has also sought government assistance.

Indian companies have raised LPG prices for the first time in about a year as the war has increased the cost of imports, which account for two-thirds of the country’s annual LPG consumption.

Qatar, India’s largest supplier of LNG, halted production last week after Iran launched strikes on Gulf countries in retaliation for Israeli and U.S. strikes.

Dwindling supplies

In Bengaluru, the southern technology hub often referred to as India’s Silicon Valley, several restaurants reported a sharp drop in deliveries and warned that kitchens could halt operations if supplies are not restored soon.

“One of our restaurants did not receive gas cylinders today,” Manish V Shetty, who runs the Udupi Food Hub chain of restaurants in Bengaluru, told Reuters.

“Thankfully, one of our older vendors helped us,” he said, noting that the chain makes immediate payments rather than using credit terms of a week or a month. “We’re also seeing a spike in the price of the sunflower oil that we use for cooking.”

Restaurants generally do not store large numbers of LPG cylinders because of safety concerns and rely on frequent replacements, said Veerendra Kamat, secretary of the Bengaluru Hotels Association.

“It’s a very grave situation. Most of the (gas) companies have stopped supplying,” said Ananth Narayan of the NRAI’s Bengaluru branch. He added that even restaurants that do maintain some stock could run out within one to two weeks.

(With inputs from agencies)