Natural Gas Pipeline Tariff Regulations, 2025

GS3 – Infrastructure

Context:

The Petroleum and Natural Gas Regulatory Board (PNGRB) has approved the Second Amendment to the Natural Gas Pipeline Tariff Regulations, 2025. This reform is aligned with the vision of “One Nation, One Grid, One Tariff”, aiming to build a unified and efficient gas-based economy.

Key Highlights of the Amendment:

 Reduction in Tariff Zones:

• The number of Unified Tariff Zones has been reduced from three to two, streamlining the pipeline tariff structure across India.
• This will simplify transportation logistics and promote greater adoption of natural gas.

 Tariff Benefit for Domestic Segments:

• The Zone 1 unified tariff benefit will now apply nationwide to Compressed Natural Gas (CNG) and Piped Natural Gas (PNG-Domestic) segments.
• This move is expected to reduce end-user costs and boost cleaner fuel usage in households and transportation.

 Long-term Fuel Procurement Mandate:

• Pipeline operators must source at least 75% of their system-use gas through long-term contracts (minimum three years).
• This will reduce volatility, ensure predictable tariffs, and cut transaction costs for both consumers and investors.

 Creation of Pipeline Development Reserve:

• A Pipeline Development Reserve will be established using surplus revenues (post-tax) from pipeline entities exceeding 75% utilisation.
  • 50% of the surplus will fund infrastructure expansion.
  • The remaining 50% will be passed on to consumers via tariff reduction.
• This approach encourages performance and builds a self-sustaining financing model for future growth.

About PNGRB (Petroleum and Natural Gas Regulatory Board):

• Established under: Petroleum and Natural Gas Regulatory Board Act, 2006
• Headquarters: New Delhi

Key Functions:

• Authorises construction and operation of natural gas pipelines and city gas distribution (CGD) networks.
• Regulates tariffs for pipeline transportation of petroleum and natural gas.
• Ensures non-discriminatory access to pipeline infrastructure.
• Promotes fair competition and market development in the energy sector.
• Protects consumer interests by enforcing fair trade and technical safety standards.
• Resolves disputes between market participants.
• Appeals against its decisions lie with the Appellate Tribunal for Electricity under the Electricity Act, 2003.