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PNGRB’s Tariff Shake-Up: Unified Zones, Long-Term Gas Contracts to Reshape India’s Pipeline Economics

Updated: July 04, 2025 10:43

Image Source: Indian Mandarins
In a landmark regulatory overhaul, the Petroleum and Natural Gas Regulatory Board (PNGRB) has approved the Second Amendment to the Natural Gas Pipeline Tariff Regulations, 2025, introducing sweeping changes aimed at boosting gas consumption, infrastructure investment, and pricing parity across India.
 
Key Highlights:
  • Unified Tariff Zones Reduced: The number of tariff zones has been cut from three to two, simplifying pricing and reducing distancebased disparities. All CNG and PNGDomestic consumers will now be charged Zone1 tariffs, regardless of their proximity to gas sources.
  • Lower Costs for Remote Areas: The reform is expected to lower piped gas and CNG prices in farflung regions, making natural gas more competitive with liquid fuels and encouraging adoption in underserved markets.
  • Mandatory LongTerm Contracts: Pipeline operators are now required to procure a minimum portion of their annual System Use Gas (SUG)—used for pipeline operations—via longterm contracts, ensuring supply stability and cost predictability.
  • Incentives for Isolated Networks: Operators of isolated or underutilized pipelines will receive infrastructure development incentives, encouraging expansion into lowpenetration zones like the Northeast and interior states.
  • ConsumerOperator Benefit Sharing: Volumes transported beyond normative thresholds will see shared benefits between consumers and pipeline operators, promoting efficiency and transparency.
  • Sectoral Impact: Analysts expect City Gas Distribution (CGD) players like IGL and GAIL to benefit from uniform tariffs, while upstream operators may face marginal cost adjustments.
This reform marks a pivotal step in India’s “One Nation, One Grid, One Tariff” vision—streamlining access, reducing costs, and laying the groundwork for a gasbased economy.
 
Source: CNBCTV18, Economic Times Energy, Business Standard

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