Daybreak - India’s LPG success story runs on a two-day buffer

Episode Date: March 15, 2026

Within days of the war in Iran, panic spread across India’s cooking-gas system. Millions rushed to book LPG refills. Restaurants shut kitchens. A temple in Delhi halted its community meals. The government invoked emergency powers and warned hoarders they could face seven years in jail. But the panic revealed a deeper question.India now has 33 crore households cooking on LPG — one of the largest cooking-gas networks in the world. Yet the country’s strategic underground reserves amount to less than two days of national demand.And interestingly, in last year’s budget documents, the government told Parliament it had no plans to build any new LPG storage caverns. Almost no one noticed that line until now.How did the world’s most ambitious clean-cooking programme end up with a buffer this thin?Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Raman Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. Early last week, nearly 9 million households across India tried to book LPG refills at the same time. Government officials went on TV urging people not to panic. The Petroleum Ministry insisted that there was no shortage.

and yet, bookings kept climbing. Because thousands of kilometers away, a war had broken out in Iran. It barely took a few days for the crisis to reach India's cooking gas system. Soon after, External Affairs Minister S.J. Shankar spoke repeatedly to his Iranian counterpart. Prime Minister Narendramodi himself placed a direct call to the Iranian President Masud Peshkian, his first conversation with Tehran since the conflict began. India even gave a safe harbor to 183 Iranian sailors whose vessel docked in Kochi after the fighting escalated. All of this was tied down to a single problem, gas shipments.

You see, more than 85% of India's LPG imports passed through the Strait of Hormuz, which is a narrow 33-kilometer waterway that has suddenly become a joke point for the entire global trade system. The effects of this were immediate. Restaurants began shutting kitchens, a temple in Delhi halted its community meals, and the Navy deployed warships to escort two LPG tankers out of the Gulf. The government invoked the Essential Commodities Act, warning holders that they could face up to seven years in jail. Now, some relief has arrived since.

Commercial LPG gas supply resumed across most states day before yesterday, and the two tankers are expected to dock at Mundra and Kandla, ports as I record this today. But the past two weeks have exposed something that most people did not know about India's cooking gas system. In 2025, the Ministry of Petroleum submitted its annual demand for grants to the parliament. It is a routine document covering budgets, schemes, and infrastructure. Now, buried in it was a line that barely drew attention. India apparently had no plans to build any additional underground LPG storage caverns. which is striking, because India now runs one of the largest LPG systems in the world,

more than 330 million household connections. And all of that demand is backed by just two underground LPG storage caverns, holding a combined of 1.4-Lack metric tons of gas. India consumes roughly 80,000 tons of LPG every day. So, in other words, the country's entire strategic underground LPG reserve amounts to less than two days of supply. So how did the world's most ambitious clean cooking program end up with a buffer this thin?

Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Dha Sharma and I don't chase the news cycle. Instead, every day of the week, my colleague Rachel Vargheese and I will come to you with one business story that is worth understanding and worth your time. Today is Monday, the 16th of March. 9 million people panicked. The government, though, says that there is no shortage. Which one is true?

By Friday last week, LPG refill bookings had jumped sharply by nearly 60% higher than the usual daily average, according to officials in the Petroleum Ministry. But the government briefings kept repeating the same line, that there was no LPG shortage. The Prime Minister himself plated down in a speech and blamed the opposition for creating panic. The Petroleum Ministry said that more than 50 lakh cylinders were still being delivered every day and none of India's 25,000 plus LPG distributors had reported a dryout, meaning they had still not run out of stock. And yet, long queues were seen outside LPG supply shops. One man reportedly even died of a heart attack while standing in a queue.

All of this is quite reminiscent of demonetization days. From what I have heard myself, cylinders are being sold in the black market right now for as much as $4,000 to $5,000. The government, meanwhile, rushed through emergency measures to keep the supply flowing. Refiner's were ordered to maximize LPG production. Petrochemical feedstocks like propane and butane were diverted towards cooking gas. And within days, domestic LPG output had increased by around 25 to 30% compared to the pre-crisis levels. In other words, the system was still moving. And yet, LPG refill bookings kept climbing.

To understand why, you have to look at how India's LPG supply chain actually works. Gas arrives at import terminals on the coast. It moves into storage tanks, then into a network of over 200 bottling plants and more than 25,000 distributors, before finally reaching households as cylinders. The system is built for steady, predictable demand. What it isn't built for is tens of millions of households all trying to secure a refill at the same time. And that is where the design of the welfare program begins to matter. The Ujala scheme focused overwhelmingly on expanding access,

adding more than 10 crore new LPG connections over the past decade and bringing the total number of households using cooking gas to more than 33 crore. But alongside that expansion, there was never a parallel system designed to communicate to people how secure the supply actually was, especially during a disruption. There is no public dashboard showing national LPG reserves, no clear signal to households about whether they should book immediately or wait for a few days. So when rumors of shortages start circulating on TV, on WhatsApp, in neighborhood conversations, households do the only rational thing that they can. They booked the cylinder now. From the government's perspective, that surge looks like panic buying. But from the consumer's perspective, it is simply risk management.

The system delivered access to cooking gas. But it never quite delivered the confidence that that access would hold under stress. So how did a decade of expanding LPG connections produce less than two days of reserves? Stay tuned to find out. The scale of what Ujjula built, is genuinely remarkable. Since 2017, India added 10-crawl connections through the program alone. Total domestic connections now stand at 33 crores. LPG imports tripled between 2011 and 12 and 24 to 25 to around 20 million metric tons a year, now meeting roughly 60% of all consumption.

But here's the thing. Import dependency also went up from about 47% in 2015 to over 60% today, and almost all of it flows through the strait of hormones. Running alongside all of that growth is the story of what wasn't built. India's LPG underground storage today is two caverns. Vishaka Putnam commissioned in 2007 and Mangaluru with 80,000 metric tons of capacity, which is roughly one day of national consumption, which came online only in 2025. The rest of the storage sits in import. terminal tanks at ports, designed to receive shipments and move them along, not to hold gas

through a sustained external disruption. And to be fair, geology does make it hard. LPG must be stored under pressure in liquid form. Building caverns for this requires stable deep rock, the kind of granite and nice that underlies Peninsula India and hosts the two existing sites. The deck in traps, which cover most of Western and Central India, present real engineering challenges. Engineers India Limited has struggled with these projects there for years. But other options do exist. Salt formations in Rajasthan's Bekaner-Barmir belt are cheaper and faster to build than granite caverns. Engineers India Limited has already signed a technology partnership with a German company called Deep to develop exactly this.

There are also depleted gas reservoirs off India's coasts in the Krishna-Godavri Basin and the Mumbai offshore fields. These could potentially be repurposed for storage. In fact, the International Energy Agency had explicitly flagged India's lack of LPG storage as a critical infrastructure weakness. So, the pathways out of this challenge do exist on paper. And yet, in that 2025 parliamentary document, the ministry's formal position, was no plans for additional caverns. Even the Mangaluru Cavern only came online in 2025. It was the same year that India signed a new LPG import deal with the US for 2.2 million metric tons annually. More imports, same storage. And crucially, US cargoes take 45 days to reach India compared to a few

days from the Gulf. So even the diversification that India is pursuing does not solve the buffer problem. It only reroutes the dependency. Six more LPG tankers as of now are waiting on the western side of the Strait of Hormuz. The government says that more will be crossing in the coming days. The crisis will ease. But the next time a conflict breaks out near the Strait of Hormuz and history suggests that there will be a next time, will India respond in the same way that it did last week? Navy escorts emergency laws, diplomatic calls at midnight? All of it loves. last minute, all of it improvised and all of it done under pressure with less than two days

of reserves in the ground. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the Ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted and produced by my colleague Snitha Sharma and edited by Rajiv Sien.