The Indian government on Wednesday implemented a regulatory framework intended to address long-standing right-of-way obstacles for natural gas infrastructure development, according to Macquarie.
The measures impose fixed timelines for approvals, introduce deemed approval provisions where timelines are not met, and cap charges associated with right-of-way to accelerate pipeline expansion.
Separately, the Petroleum and Natural Gas Regulatory Board (PNGRB) issued guidance urging city gas distribution companies to prioritize maximizing new consumer hookups in areas where existing pipeline infrastructure is already in place.
Despite widespread availability of LPG - connectivity now exceeds more than 330 million households - penetration of piped natural gas remains limited. PNG is used by around approximately 5% of households overall and is mostly confined to larger urban centers. Moreover, fewer than two-thirds of households that are connected to PNG actually consume it.
PNGRB has set an explicit target of reaching approximately 126 million domestic PNG connections by 2034, which would equate to about a 7.5-fold increase from current levels. At the same time, industrial and commercial PNG connectivity stands at roughly 22,000 and 49,000 connections respectively; these segments nevertheless account for more than one-third of total gas sales for city gas distribution firms.
Historically, city gas distribution firms have directed capital expenditure toward compressed natural gas (CNG) station rollouts because those investments typically deliver faster payback periods than extending pipeline networks. The regulatory push and Minimum Work Program obligations from PNGRB are expected to prompt a reorientation toward pipeline development. Failure to meet prescribed work program schedules could expose companies to penalties and, in extreme cases, cancellation of authorization.
Macquarie highlighted that ongoing supply disruptions have underscored India’s reliance on LPG. The firm also noted that the recent regulatory changes create a framework that could speed up PNG connectivity nationwide. However, Macquarie expects that near-term earnings for mid-stream and downstream gas companies will be affected by current supply disruptions, and that recovery in volumes may take longer than was previously anticipated.