Government Formalizes OTP Delivery System

The Ministry of Petroleum & Natural Gas (MoPNG) is making its One-Time Password (OTP) based Delivery Authentication Code (DAC) system a permanent fixture for managing India's extensive LPG distribution. This change from a temporary measure to a permanent rule highlights how digital verification has improved supply chain integrity and the government's effort to fix long-standing issues. The DAC system, initially rolled out during supply disruptions caused by the West Asia conflict, has effectively reduced fuel diversions, ensured subsidized fuel reaches rightful households, and strengthened the system against external pressures.

DAC's Success in Curbing Diversion

The Delivery Authentication Code (DAC) system now handles over 93% of LPG deliveries, striking a major blow against the ongoing problems of diversion and black marketing. Because domestic LPG is subsidized, it has long been a target for illegal sales, causing significant financial losses and supply problems. The DAC, which uses an SMS-based one-time password, confirms each delivery. This prevents cylinders meant for homes from being sent to the black market. This digital check has tightened control and created a clear, verifiable record of every delivery. India's Public Sector Oil Marketing Companies (PSU OMCs) now deliver about 52 to 55 lakh 14.2 kg LPG cylinders daily, with nearly all online bookings (99%) processed digitally. This digital progress aligns with the wider adoption of advanced technologies like SCADA and IoT across India's energy sector to improve efficiency and customer service.

Strengthening Supply Chains Amid Global Uncertainty

Making the DAC system permanent comes at a crucial time, with ongoing global geopolitical instability affecting energy markets. The conflict in West Asia has repeatedly shown India's vulnerability, as over 85% of its LPG imports pass through the Strait of Hormuz. Such disruptions have previously caused supply shortages, affecting schools and commercial kitchens. They also forced India to make spot purchases and seek imports from new sources, including the US. By adding a strong digital check at delivery, the MoPNG is making its domestic supply chain more resilient. This ensures that all procured fuel reaches end-users without being diverted. This is vital for fair distribution, especially for the more than 10.50 crore beneficiaries of the Pradhan Mantri Ujjwala Yojana (PMUY). The PMUY scheme has greatly increased LPG access, and dependable delivery is key to its success. It also helps address challenges like delivery costs in rural areas. Commercial LPG supplies have been raised to 70% of pre-crisis levels, showing efforts to balance domestic and commercial demand amid current supply pressures.

Persistent Risks and Challenges

However, risks remain despite these technological improvements. The DAC system's success depends heavily on having accurate and up-to-date registered consumer mobile numbers, which is difficult in areas with low mobile use or old data. Problems with mobile network signals or users making errors when sharing the code could cause deliveries to fail, affecting vulnerable recipients. Also, the history of black market sales, where cylinders have been sold for up to five times the official price during shortages, suggests criminals will find new ways to bypass digital controls. The large number of enforcement actions, including over 1.28 lakh raids and thousands of cylinders seized since March 2026, show these illegal activities continue. The PMUY scheme, while successful in giving connections, has struggled with keeping refills affordable and changing user habits. These issues could worsen if delivery systems face new technical problems or if people cannot access the DAC. Centralized digital systems also carry the risk of being targeted by cyber-attacks.

Next Steps for India's Energy Sector

The MoPNG's dedication to the DAC system points to a wider move towards digitalization and better oversight in India's essential energy infrastructure. As India navigates unsteady global energy markets and works to increase access to clean cooking fuel, improving these digital checks will be vital. Current projects in the downstream oil and gas sector aim to update IT systems, use data analysis, and enhance visibility across the entire supply chain. The successful adoption of DAC is expected to lead to more technological improvements aimed at ensuring efficiency, transparency, and strong supply security throughout the energy sector.