LPG Cylinder crisis: 20% Mumbai hotels shut, 50% may close soon, says association

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The Mumbai hotel association, AHAR, said that 20% of the city's hotels have shut down due to gas supply issues, according to India Today.

If the situation continues, up to 50% of the hotels in Mumbai could shut down over the next two days because of the disruption in gas supply, the association said.

It also said that the number of hotels that remain operational will depend on how much gas supply each establishment currently has available.

AHAR clarified that no official decision has been taken by the association to shut hotels, and the decision to remain open or close will depend on individual hotel owners.

LPG shortage 

The oil ministry has set up a committee to examine LPG supply issues after a sudden shortage of commercial cylinders alarmed the hospitality sector, with restaurant associations warning that eateries could shut down within days if supplies are not restored.

The move comes as the widening conflict in the Middle East disrupts fuel supply chains, including India’s LPG imports. The government has prioritised cooking gas supplies for households, triggering a supply crunch for hotels and restaurants that rely on market-priced commercial LPG.

In a post on X, the ministry said a committee comprising three executive directors of oil marketing companies (OMCs) has been formed to review requests for LPG supplies to restaurants, hotels and other industries.

India consumes around 31.3 million tonnes of LPG annually. Of this, about 87 per cent is used in the domestic sector for household kitchens, while the remaining share goes to commercial establishments such as hotels and restaurants.

Nearly 62 per cent of India’s LPG requirement is met through imports. However, the conflict involving Iran, Israel and the United States has disrupted supply routes after the closure of the Strait of Hormuz, through which India typically receives 85–90 per cent of its LPG imports from countries such as Saudi Arabia.

As authorities explore alternate sources, limited supplies have forced the government to prioritise the domestic sector, leaving commercial establishments facing shortages.

Industry sources said the disruption has already begun affecting operations in Mumbai and Bengaluru, where hotels and restaurants are struggling to secure cooking gas.

Vijay Shetty, president of the India Hotels and Restaurant Association, said the shortage is spreading rapidly and could soon paralyse the sector.

While maintaining that the country has adequate fuel stocks, the ministry has directed refineries to maximise LPG production by diverting petrochemical streams. It has also extended the LPG refill booking cycle to 25 days from 21 days.

“In light of current geopolitical disruptions to fuel supply and constraints on supply of LPG, the ministry has issued orders to oil refineries for higher LPG production and using such extra production for domestic LPG use,” the ministry said.

“The ministry has prioritised domestic LPG supply to households and introduced a 25-day inter-booking period to avoid hoarding and black marketing.”

It added that imported LPG meant for non-domestic use is being prioritised for essential sectors such as hospitals and educational institutions.

*with PTI Inputs