By Dhanendra Kumar, Chairman, Competition Advisory Services India LLP (COMPAD)
The order issued by the ministry of petroleum and natural gas under the Essential Commodities Act, 1955, on March 24 may not grab headlines, but may be one of the most consequential reforms in India’s energy sector.
At its core, the Natural Gas and Petroleum Products Distribution Order addresses a fundamental constraint that has long held back India’s transition to a gas-based economy—the difficulty of building and expanding pipeline infrastructure. By tackling issues such as denial of land access, excessive right-of-way charges, and delays arising from fragmented approvals, the focus is being rightly shifted from policy ambition to execution.
This shift is both timely and necessary. India has, for years, articulated its intent to increase the share of natural gas in its energy mix—from around 6% to 15%. Yet, progress has been uneven. The constraint has not been supply alone, but connectivity. Without last-mile pipeline infrastructure, natural gas remains underutilised, particularly in households and small industries.
The order’s emphasis on creating a uniform national framework is therefore significant. Pipeline developers today face a patchwork of regulatory requirements across states and local bodies. Municipal authorities, residential welfare associations, and other entities often deny access to land or premises. The resulting delays and cost escalations deter investment and slow project execution.
Standardisation can change this. A predictable and time-bound approval mechanism would reduce transaction costs, improve investor confidence, and accelerate the rollout of city gas distribution networks. For an infrastructure-intensive sector, such regulatory clarity is critical.
There is also a larger strategic context. India’s energy security remains closely tied to global developments, particularly in the Gulf region. Disruptions in supply chains or geopolitical tensions—especially around critical chokepoints such as the Strait of Hormuz—can have immediate and significant implications for domestic energy availability and prices.
In this backdrop, reducing dependence on liquefied petroleum gas (LPG) imports becomes imperative. While LPG has played a transformative role in expanding clean cooking access, it also exposes India to external vulnerabilities. Piped natural gas (PNG), delivered through domestic infrastructure, offers a more stable and resilient alternative.
However, infrastructure expansion alone will not guarantee success. The order rightly acknowledges a less visible but equally important challenge: consumer behaviour. Even in areas where PNG networks are available, many households continue to rely on LPG. This preference is shaped by habit, perceived convenience, and sometimes pricing differentials.
Addressing this will require a coordinated approach. Pricing policies must make PNG an attractive option. Service reliability—particularly uninterrupted supply and responsive maintenance—will be critical in building consumer trust. Awareness campaigns can also play a role in highlighting the long-term economic and environmental benefits of switching to gas.
From an industry perspective, the order has the potential to unlock significant investment. By reducing regulatory uncertainty and easing access constraints, it creates a more conducive environment for pipeline developers and city gas distribution companies. Faster rollout of infrastructure can, in turn, stimulate demand across sectors, including transport, manufacturing, and urban households.
Yet, as with many reforms in India, the real test lies in implementation. Coordination across multiple layers of government—central, state, and local—remains a persistent challenge. Ensuring that the spirit of the order is translated into consistent action on the ground will require robust monitoring and accountability mechanisms.
There is also a need to ensure infrastructure expansion does not lead to market distortions. Pipeline networks, by their nature, can exhibit characteristics of natural monopolies. Ensuring fair and non-discriminatory access, preventing abuse of dominance, and maintaining competitive neutrality will be essential as the sector grows.
From an environmental standpoint, the push toward natural gas is a pragmatic step in India’s energy transition. While not a zero-carbon fuel, natural gas is significantly cleaner than coal and oil, particularly in urban applications. Expanding its use can contribute to improved air quality and reduced emissions, especially in densely populated cities.
At the same time, this should be seen as part of a broader transition strategy. Investments in gas infrastructure must complement and not substitute the growth of renewable energy, storage technologies, and emerging solutions such as green hydrogen. The objective should be to build a diversified and future-ready energy system.
Ultimately, the order represents a recognition that infrastructure is the binding constraint in India’s energy transition. By addressing the practical challenges of pipeline development, the government is laying the groundwork for a more efficient and resilient energy ecosystem.
If implemented effectively, this reform could have far-reaching implications—not just for the energy sector, but also for the broader economy. Lower energy costs, improved supply stability, and cleaner fuel options can enhance competitiveness, support industrial growth, and improve quality of life.
This is, therefore, more than a technical regulatory change. It is a structural reform that goes to the heart of India’s development trajectory. The opportunity is clear. The challenge now is to ensure that execution keeps pace with intent.