A new proposal by the Petroleum and Natural Gas Regulatory Board (PNGRB) could lead to reduced prices for CNG (Compressed Natural Gas) and PNG (Piped Natural Gas). This move aims to make natural gas more affordable, benefiting both household and transportation users across India. The regulatory body has suggested changes in the tariff structure for gas pipelines to encourage consumption and improve accessibility.
Why the Change in Pipeline Tariff?
Currently, transmission tariffs for natural gas pipelines are determined based on the distance between the source and the consumer. The longer the distance, the higher the tariff, making CNG and PNG more expensive for users located far from gas sources. The proposed new system seeks to eliminate this disparity by offering a uniform pricing model, ensuring lower costs for consumers who rely on urban gas supply.
How Will the New Pricing Model Work?
Under the new system, the pipeline tariff structure will undergo major changes:
- Flat Rate for CNG and PNG Users: The proposal suggests that urban gas distribution networks supplying CNG and PNG to homes will be charged the lowest possible pipeline tariff, irrespective of their distance from the source.
- Zone-Based Pricing Adjustments: Instead of the earlier distance-based pricing, a standard rate of 66.17% of the integrated tariff will be charged for the first tariff zone, while Zone-1 users will pay 100% of the base tariff.
- Fair Pricing Across the Country: Households using piped gas and vehicles running on CNG will be charged Zone-1 tariffs, no matter how far they are from the gas-producing regions or import terminals.
Expected Impact on CNG-PNG Users
The implementation of this policy could lead to several key benefits for consumers and industries alike:
- Lower Prices: With reduced pipeline transmission costs, gas distribution companies are expected to pass on the benefits to end-users in the form of cheaper CNG and PNG rates.
- More Affordable Public Transport: CNG-powered public transport services, such as buses, auto-rickshaws, and taxis, may experience a drop in fuel costs, leading to lower fares for passengers.
- Encouraging a Shift to Clean Energy: With a more competitive price, more people may switch from traditional fuels such as petrol, diesel, and LPG to CNG and PNG, which are considered cleaner energy sources.
- Boost to Urban Gas Distribution Networks: The new tariff model is expected to accelerate investments in urban gas supply networks, allowing expansion into more cities and rural areas.
Government’s Vision for Increased Gas Consumption
The Indian government has been actively working to promote the use of natural gas as part of its long-term energy strategy. The objective is to increase the share of natural gas in India’s total energy mix from the current 6% to 15% by 2030. The reduction in pipeline tariffs aligns with this goal, making CNG and PNG more accessible and cost-effective.
Past Efforts to Standardize Tariffs
In November 2020, the PNGRB had introduced an integrated tariff model, which was officially implemented in April 2023. This model was designed to create a unified pricing structure across various regions, reducing the disparity in natural gas costs. However, despite these changes, consumers located far from the gas source continued to pay higher tariffs. The latest proposal is a step further to address this issue by ensuring equal pricing for urban gas consumers, irrespective of distance.
Industry Reactions to the Proposal
The proposed changes have received a positive response from industry experts and stakeholders. Many believe that this move will not only reduce costs but also boost demand for natural gas. Key points highlighted by industry leaders include:
- Natural Gas Will Compete with Liquid Fuels: Lower tariffs will make CNG and PNG even more competitive compared to petrol, diesel, and LPG.
- Encouragement for New Investments: With a uniform pricing policy, more gas distribution companies may expand their networks to previously unviable areas.
- Financial Relief for Consumers: Households using PNG for cooking and heating could see a reduction in their monthly expenses.
Next Steps: What to Expect?
The PNGRB has issued a public consultation paper to gather feedback from stakeholders before finalizing the tariff changes. If approved, these changes could be implemented in the coming months, leading to tangible benefits for millions of consumers across India.
The initiative is a major step towards making clean energy sources more accessible and affordable. It not only supports the government’s vision of a gas-based economy but also provides financial relief to households and businesses reliant on CNG and PNG.
