PNGRB Approves Pivotal Reforms in Natural Gas Pipeline Tariff Regulations
4th July 2025
In a decisive move aimed at strengthening India`s transition towards a cleaner, more efficient energy landscape, the Petroleum and Natural Gas Regulatory Board (PNGRB) has approved the Second Amendment to the Natural Gas Pipeline Tariff Regulations, 2025. These sweeping reforms underscore PNGRB`s commitment to developing a more transparent, consumer-oriented, and investment friendly natural gas infrastructure in India
The reforms were approved during a recent Board meeting following extensive consultations with stakeholders across the industry. Anchored in the vision of “One Nation, One Grid, One Tariff,” this regulatory overhaul reflects PNGRB’s strategy to simplify the market structure, promote cleaner fuels, and build an inclusive gas-based economy
Key Reforms:
- Streamlined Tariff Zones: PNGRB has reduced the number of Unified Tariff Zones from three to two, simplifying the natural gas transportation system across the country. This initiative ensures a more equitable tariff structure and enhances access to natural gas, especially in underserved regions
- CNG & PNG (Domestic) Boost: In a consumer-centric move, the benefit of the Unified Zonal Tariff of Zone 1 has been extended nationwide to Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) Domestic segments. This is poised to make natural gas more affordable for urban households and transport networks, thereby supporting broader clean energy adoption
- Efficient Fuel Procurement Mandate: To stabilize tariffs and ensure efficiency in supply, PNGRB has mandated pipeline operators to procure at least 75% of their annual system-use gas through long-term contracts (minimum three-year tenure). This will lower procurement risks, reduce transaction costs, and ultimately result in more predictable and affordable tariffs for consumers and investors alike
- Pipeline Development Reserve – A Sustainable Infra Model: To fund future expansion, PNGRB has introduced a dedicated Pipeline Development Reserve, utilizing earnings from pipeline entities that exceed 75% utilization benchmarks. Notably, 50% of these net-of-tax earnings will be reinvested into infrastructure development, while the remaining 50% will be passed on to consumers through tariff adjustments—creating a performance-linked, self sustaining model for growth
Towards a Clean, Affordable & Connected Future: These reforms represent a strategic blend of regulatory innovation and stakeholder centric governance, ensuring that both consumers and industry players benefit equitably. By realigning tariff structures, incentivizing long-term planning, and reinvesting in infrastructure, PNGRB is laying a strong foundation for India’s cleaner, greener, and more inclusive energy future