Gas shortages require swift government response

Nepal's Liquefied Petroleum Gas (LPG) market is currently experiencing a paradox: consumers face shortages even as government officials assert that imports from India remain consistent. This recurring crisis resurfaced less than two weeks after the Nepal Oil Corporation (NOC) reinstated the sale of full-sized, 14.2 kg cylinders. NOC statistics reveal that while gas supply hovered around 40,000 tonnes per month from February to July, the current scarcity indicates that import volume is not the root cause.

The current instability is largely attributed to reactive management. In response to the West Asian conflict in February, the government implemented rationing, limiting sales to half-filled 7.1 kg cylinders to conserve national stocks. This measure effectively managed demand for several months. However, the subsequent transition back to full-cylinder sales triggered a sudden, overwhelming surge in domestic gas demand. An NOC director acknowledged that the announcement of full cylinders' availability caused all previously sidelined empty cylinders to flood the market simultaneously, placing immense strain on the distribution network. This surge was amplified by a lack of consumer confidence, leading to panic-driven stockpiling by both households and commercial entities.

Market volatility is further worsened by institutional weaknesses in regulating cylinder stocks. Nepal has an estimated 17.5 million LPG cylinders in circulation, a significant increase from 14.4 million in 2021. Despite this large volume, there is no comprehensive policy limiting cylinder ownership per household or business, nor is there a system to manage the annual release of new cylinders. This regulatory vacuum allows those with resources to hoard cylinders during perceived shortages, leaving individuals with only one cylinder without recourse.

The government and NOC must implement robust, long-term management strategies. Discussions are underway to consolidate the industry, reducing bottling plants from 58 to fewer than 30. The NOC is also attempting to improve distribution monitoring by identifying high-demand areas and redirecting supplies daily. These logistical improvements must be complemented by clear legal limits on cylinder ownership to prevent hoarding and ensure equitable distribution.