Indraprastha Gas To Benefit, Mahanagar To Face Challenges Following Petroleum Regulator's Tariff Reforms

The Petroleum and Natural Gas Regulatory Board has approved amendments to the Natural Gas Pipeline Tariff Regulations, 2025, aimed at simplifying tariffs and enhancing access to natural gas across India. The most notable change is the reduction in the number of unified tariff zones from three to two, which is expected to streamline the country's natural gas transportation network and improve access in underserved areas.

Analysts have weighed in on the impact of these reforms, highlighting varied effects on different companies. According to preliminary calculations based on earlier draft regulations, Indraprastha Gas Ltd. is expected to benefit by Rs 0.7 per standard cubic meter.

In contrast, Mahanagar Gas Ltd. could face a negative impact of Rs 0.5 per scm. Gujarat Gas Ltd. may also experience some negative effects, although the exact impact is difficult to quantify at this stage. GAIL India Ltd. is anticipated to benefit marginally, but precise quantification remains challenging, they said.

Following the changes, the benefit of Zone 1 tariff has been extended nationwide for Compressed Natural Gas and Domestic Piped Natural Gas, making natural gas more affordable for households and transport.

Analysts who spoke to NDTV Profit explained that the existing three tariff zones comprise of Rs 42/mmbtu, 82/mmbtu and Rs 107/mmbtu. These have been reduced to two zones; however, zone 1 tariff will increase whereas zone 3 will reduce.

All CNG and D-PNG volumes will attract Zone 1 tariff; and commercial and industrial customers will pay as per their zone, they said.

Zone 1 tariff will increase by 30-50% and zone 2 can be similar to current rate, analysts said.

IGL pays zone 3 tariff, which is expected to come down to Rs 80-90/mmbtu. The firm could see a Rs 0.6-0.9/scm reduction in transmission cost.

Indraprastha Gas will be the biggest beneficiary under coverage as it previously fell under tariff zone 3, which was the highest. Roughly, this change should bring down costs equal to $0.5/MMBtu or Rs 1.3/scm, one analyst told NDTV Profit on the condition of anonymity.

Moreover, pipeline operators are now required to procure at least 75% of system-use gas through long-term contracts equal to or greater than three years, which is expected to improve price stability and efficiency.

Most city gas distribution companies already have higher long-term contracts. A dedicated fund has been introduced, where 50% of surplus earnings (beyond 75% utilisation) will be reinvested into infrastructure, and the remaining 50% will be passed to consumers through tariff adjustments.

While few pipelines have achieved more than 75% utilisation, the main HVJ pipeline has exceeded this threshold. This reform is marginally negative for GAIL, though the exact value is difficult to ascertain, analysts have said.