India Pushes Natural Gas to Reduce LPG Reliance

New Framework to Boost Gas Infrastructure

The Indian government has established a new framework with fixed timelines and capped charges to accelerate the development of natural gas infrastructure. This move aims to increase piped natural gas PNG connectivity and address right-of-way challenges, according to a Macquarie report.

Overview of India's Gas Market

Despite LPG connectivity reaching over 330 million households, PNG penetration remains low at approximately 5 percent, concentrated in large cities. The Petroleum and Natural Gas Regulatory Board PNGRB has set an ambitious target of reaching 126 million domestic PNG connections by 2034, a 7.5-fold increase from current levels.

Impact on Gas Companies

City gas distribution companies are now expected to shift their capital expenditure from compressed natural gas CNG stations to pipeline connectivity to meet Minimum Work Program targets. Failure to meet these schedules could result in penalties. Macquarie notes that while these reforms are positive for long-term PNG growth, near-term earnings for gas companies may be impacted by ongoing supply disruptions.

Summary and Outlook

Regulatory reforms create a clear path for expanding India's PNG network, reducing its strong dependence on LPG. While volume recovery may take time, the long-term focus is on achieving significant growth in domestic gas connections.

FAQ

Q: What is the primary goal of India's new gas policy?
A: To accelerate the expansion of piped natural gas PNG infrastructure and increase domestic connections, thereby reducing the country's heavy reliance on LPG.

Q: What is the target for new PNG connections?
A: The PNGRB aims for approximately 126 million domestic PNG connections by 2034.

Source: Investing.com