Restore APM allocation for CNG sector, include gas under GST regime: Panel

To boost natural gas adoption, a PNGRB expert panel has recommended restoring APM gas allocation for CNG, including gas under GST, and recognising it as a cleaner fuel in the scrappage policy

Ensuring policy support to the city gas distribution (CGD) sector and restoring allocation of administered price mechanism (APM) for the compressed natural gas (CNG) segment are among the slew of measures recommended to the government by an expert committee constituted by the Petroleum and Natural Gas Regulatory Body (PNGRB).

 

Besides this, the committee recommended that compressed natural gas (CNG) should be recognised as a cleaner fuel under the vehicle scrappage policy, alongside electric vehicles (EVs) and hydrogen.

 

Building on proven success of mandated CNG adoption in public transport fleets in Delhi and Mumbai, the committee recommended extension of similar policy guidelines nationwide, while also suggesting defined percentage of heavy-duty and public transport fleets to transition to CNG, starting with 20 per cent adoption by priority users, such as mining, cement, and other large fleet operators.

 

To encourage cleaner fuel adoption among truck owners, vehicle scrappage policy should be amended to allow a five-year life extension for diesel trucks retrofitted to run on CNG.

 

The committee pointed out that the share of CGD sector in India’s total gas consumption has plateaued in recent years, signalling the need for sustained infrastructure expansion, demand aggregation, and regulatory alignment to unlock the sector’s full potential.

 

India’s natural gas demand is projected to grow from approximately 260–300 million metric standard cubic metre per day (mmscmd) in 2030 to 365–500 mmscmd by 2040, while domestic gas production is expected to reach around 120 mmscmd in the near term, it added.

 

India’s rising dependence on imported regasified liquefied natural gas (RLNG) necessitates secure long-term contracts, diversified supply sources, and an efficient import and distribution infrastructure.

 

A simplified, unified tax structure is essential to support gas adoption and accelerate sectoral growth, the committee said. It recommended inclusion of natural gas under goods and service tax (GST) regime, removal of excise duty on CNG and exemption in customs duty on LNG imported for captive gas-based power plants and CGD sector.

 

The committee also suggested promoting transparent trading mechanisms to deepen gas markets.