Most importantly, these policies provide a clear timeline for issuing clearance certificates to lay pipelines. As natural gas is a central subject, a common national framework with harmonised rules is expected to greatly improve overall outcomes.
In addition, effective measures are needed to enhance gas availability and ensure affordable pricing. To ensure nationwide availability, transmission pipelines must reach every district, enabling efficient network expansion. Connectivity delays lead to higher costs, project delays, and declining investor interest.
Apart from supply hurdles, CGD companies struggle with generating viable demand—with switching cost (from LPG to PNG) and the overall cost competitiveness being key barriers to PNG’s household penetration. To illustrate, the alternative household fuel, LPG, enjoys various incentives such as the PM Ujjwala Yojana and other state-specific benefits, which are not available to household PNG. Such consistent policy efforts have resulted in LPG demand to grow significantly, with nearly 330 million active domestic consumers, 20 times that of home PNG connections.
Natural gas also faces an uneven playing field due to taxation disparities. It falls under the VAT regime while alternative fuels fall under GST, making PNG cost-inefficient for both consumers and CGD entities. The Chintan Research Foundation finds that expanding the natural gas sector requires policies that enable demand through price stability and tax structure rationalisation.
To unlock the CGD sector’s full potential, the regulatory hurdles and penalties need to be changed to a conducive policy ecosystem. The regulator is reported to be considering measures for CGD entities that miss their household connection targets. While accountability is vital, such measures without structural reforms—like streamlined permissions, transmission access, tax parity, and fair PNG-LPG competition—will further burden the CGD sector.
It is crucial for policymakers to recognise the genuine hurdles to understand delays and guide a fair policy. Hence, instead of business as usual, a facilitative approach with a focus on the ease of doing business will steer the CGD sector to the levels necessary to ensure a smooth and sustainable energy transition for India.
(Authors are research associates at Chintan Research Foundation. Views are personal)