CGD transportation cost set to come down by ₹1,000 crore annually

PNGRB has cut tariff zones to two and will apply the lower Zone-1 rate for CNG and domestic PNG nationwide, reducing delivered CNG prices by Rs 1.25-2.50 per kg and PNG by Rs 0.90-1.80 per SCM

The transportation cost of the city gas distribution (CGD) sector is expected to reduce by approximately ₹1,000 crore annually following rationalisation of gas pipeline tariff structure by India’s gas regulator.

 

In a consumer-centric reform, the Petroleum and Natural Gas Regulatory Board (PNGRB) reduced the number of tariff zones from three to two in order to promote the use of natural gas. The two tariff zones would be up to 300 km and beyond 300 km.

 

The announced reforms would lead to a reduction in delivered prices for consumers of compressed natural gas (CNG) by ₹1.25-2.50 per kg and domestic piped natural gas (PNG) by ₹0.90- 1.80 per standard cubic metre (scm). 

The PNGRB notified that the transportation tariffs would be ₹54 per million British thermal unit (mbtu) for up to 300 km, and ₹102.86 per mbtu beyond 300 km, effective January 1, 2026.

 

To further facilitate the use of CNG and domestic PNG, the regulator said that the tariff applicable for up to 300 km would be charged for the CNG and domestic PNG sector across the country, irrespective of distance.

 

CNG and PNG consumers nationwide would be charged the Zone-1 tariff of ₹54 per mbtu, resulting in nearly 50 per cent lower transportation charges for those located beyond 300 km.

 

“This reform advances the objective of ‘One Nation, One Grid, One Tariff’, reduces regional disparities in transportation costs, and aligns natural gas pricing with the transportation cost policy of competitive fuels such as LPG (liquefied petroleum gas) and Motor Spirit,” the regulator said in a press release.

 

Shares of CGD companies, including Indraprastha Gas Limited (IGL) and Mahanagar Gas Limited (MGL), were trading in green on Wednesday. IGL shares on the BSE closed 4.68 per cent higher at ₹192 while MGL rose 0.64 per cent at the end of trade.

 

IGL Managing Director (MD) Kamal Kishore Chatiwal had told Business Standard in October that the company would pass on the benefits of tariff regulations, as they are implemented. Consumers might expect some relief in domestic PNG prices, Chatiwal had said.

 

The reforms in the unified tariff structure come as the Indian government aims to increase the share of natural gas to 15 per cent in the total energy mix by 2030, from the current 6 per cent. 

Key highlights

• PNGRB cuts gas pipeline tariff zones from three to two
• CNG, PNG prices to drop significantly for consumers nationwide
• Zone-1 tariff ₹54 per MMBTU applicable nationwide
• Unified tariff supports One Nation One Grid policy
• Reforms boost CGD stocks, aid gas share target