The entire economies of South Asian countries are reeling as a global energy crisis, sparked by the U.S. and Israel's invasion of Iran, ripples worldwide. India, Pakistan and Bangladesh, which rely entirely on imports of massive volumes of fossil fuels from the Gulf region, have been hit directly in gas supply and are undergoing an economic crisis tantamount to a national emergency.
India, the world's second-largest importer of liquefied petroleum gas (LPG), saw its restaurant industry, the backbone of its commercial infrastructure, begin to collapse. According to a compilation of major media reports on the 16th, including the Financial Times (FT) and the Hindustan Times, large restaurants across India, including in the capital, Delhi, and the financial hub, Mumbai, have simultaneously halted sales of deep-fried dishes that consume unusually high amounts of gas and menus that require long boiling times. The Indian Hotel and Restaurant Association (AHAR) officially said 20% of hotels and restaurants in Mumbai have already gone into temporary shutdowns because they could not endure the gas shortage. The association has even issued specific guidance to members to always cover pots while cooking to cut gas consumption, however slightly.
Amit Bagga, founder of the famous restaurant chain Daryaganj, told the Hindustan Times that "80% of Indian restaurants rely absolutely on commercial LPG, and inventories cover at most one to two days, making the structure so vulnerable that even a single day's disruption in supply forces immediate closures." Although Narendra Modi, India's prime minister, has issued back-to-back public reassurance statements, on-the-ground markets are already seeing routine gas hoarding and price spikes, with chaos growing out of control. Given that gas prices are still rising, the number of chain closures among Indian restaurants unable to bear labor and ingredient costs is likely to increase.
The daily pain felt by small vendors and ordinary residents, whose financial resources are far weaker than those of large, well-capitalized restaurant chains, is presumed to be much more severe. Vijender Naik, manager of a fast-food outlet in downtown Mumbai, told the FT, "It's impossible to obtain a gas cylinder through normal distribution routes," adding, "the price of a cylinder on the black market has surged to 1,800 rupees (about 29,000 won), double the usual level." Trinas Mato, a street vendor in New Delhi's commercial district who sells boiled tea, also told the FT, "The price of 1 kilogram of gas jumped from 100 rupees before the crisis to 250 rupees in just a few days, so I had no choice but to reduce the serving size of tea to cut losses."
To make matters worse, even crematoriums—essential facilities for funerals—saw their gas supplies completely cut off. To prevent the worst-case scenario of bodies not being processed in time and piling up at crematoriums, authorities resorted to farcical measures such as using electric furnaces, firewood, coal and kerosene instead of gas for cremations. Ordinary Indian citizens are lining up for hours every morning, sleeplessly waiting in front of ration outlets to obtain cooking gas cylinders, a daily necessity.
The shockwaves from the gas crisis are quickly spreading beyond India to the entire South Asian region. Pakistan has taken the drastic step of ordering all schools nationwide to close until the end of the month to slash energy consumption at the national level. University classes will move entirely online. Pakistan's public institutions have abruptly adopted a four-day workweek, and authorities have even deployed an extreme measure by raising domestic gasoline prices by 20% in one go. Prime Minister Shehbaz Sharif pleaded for energy conservation in an emergency national address, saying, "If the national economic situation deteriorates even a little further, we will reach a dreadful point where basic prices can no longer be controlled."
Conditions inside Bangladesh are not much different. New Prime Minister Tarique Rahman has halved lighting in government offices and imposed a total ban on air conditioning. To prevent a grid collapse, the government halted operations at a state-run fertilizer plant for 15 days and redirected all the gas used there to key power plants. Umama Fatema, a student representative at the University of Dhaka, said, "A large number of major exams on campus were suddenly canceled due to the gas shortage."
Sri Lanka, which has suffered from chronic economic woes and experienced a sovereign default, has not been spared from the current gas shortage. At gas stations across Sri Lanka, three-wheel taxis and motorcycles formed lines so long in search of the dwindling fuel that urban traffic ground to a halt. President Anura Kumara Dissanayake acknowledged in a national address that "the total national stock of LPG amounts to only about one week's supply."
South Asia is so reliant on gas imports from Middle Eastern oil producers as to be nearly absolute. India sources 60% of all LPG it consumes from Gulf countries, including the United Arab Emirates (UAE), Kuwait, Qatar and Saudi Arabia. Bangladesh also relies absolutely on imports for 95% of its total national energy demand. In a similar structure, Gulf countries such as Qatar and the UAE alone account for 75% of its LNG imports.
Even Pakistan, which has some domestic production facilities, still imports 20% of its total gas consumption from the Gulf. Pakistan now faces a crisis in which it may not receive even a single one of six LNG cargoes firmly promised for import next month from QatarEnergy. Qatar is a key partner that exclusively supplies 90% of Pakistan's total LNG imports.
The armed conflict in the Middle East has directly struck the economic fault lines of these South Asian countries. India, Pakistan, Bangladesh and Sri Lanka have weaker cash purchasing power in the gas transaction market than European countries. Since operations at Qatar's Ras Laffan plant, the world's largest LNG export facility, were halted due to the fallout from the armed clashes, they have been helplessly outbid by Europe in the global scramble for the same gas. Global energy consultancy Wood Mackenzie assessed that "the sudden shock to global gas supplies immediately led to a wide-ranging system of forced energy rationing across South Asian economies, including Bangladesh."