City gas firms to pay same pipeline tariff

New Delhi: All city gas distribution (CGD) companies will now pay the same pipeline tariff regardless of their distance from the gas supply source, a measure that will help reduce transportation costs for licensees and potentially lower cooking and transport fuel prices in far-flung licensed areas.

The Petroleum and Natural Gas Regulatory Board (PNGRB) has amended the Natural Gas Pipeline Tariff Regulations, introducing key reforms to the sector. These include streamlining unified tariff zones, allowing a single pipeline tariff for CGD companies, and creating a dedicated pipeline development reserve.

The regulator has reduced the number of unified tariff zones from three to two. "This initiative ensures a more equitable tariff structure and enhances access to natural gas, especially in underserved regions," PNGRB said.

The existing three zones (up to 300 kilometres, 300-1,200 km and above 1,200 km) will now be consolidated into two (up to 300 km, and above 300 km). This change will lower the pipeline tariff for users located farther from supply sources while marginally increasing it for nearer users. However, overall tariffs are expected to remain revenue-neutral for pipeline operators.

"The benefit of the unified zonal tariff of zone 1 (up to 300 km) has been extended nationwide to the compressed natural gas (CNG) and piped natural gas (PNG) domestic segments," the regulator said. "This is poised to make natural gas more affordable for urban households and transport networks, thereby supporting broader clean energy adoption."

The freight equalisation approach mirrors the pricing mechanism used for liquefied petroleum gas (LPG), where cylinders are priced uniformly across locations, irrespective of distance from refineries or import terminals-though remote areas may bear a small additional freight charge.

However, the lowest uniform tariff benefit for CGD companies will not apply to gas sold for industrial and commercial use.