PNGRB's Vision 2040 for Natural Gas Infrastructure Roadmap: Fertiliser Sector Biggest Consumer, Promoting Bio-Fertilisers and Nano Urea Emphasised
SDG 7: Affordable and Clean Energy | SDG 9: Industry, Innovation and Infrastructure
Institutions: Ministry of Petroleum and Natural Gas | Petroleum and Natural Gas Regulatory Board
The “Vision 2040: Natural Gas Infrastructure in India” is a strategic roadmap developed by a High-Level Expert Committee (HLEC) constituted by the Petroleum and Natural Gas Regulatory Board (PNGRB). Its core purpose is to accelerate natural gas consumption in the country to meet the government’s ambitious target of increasing the share of gas in the primary energy mix from 6% to 15% by 2030. The report integrates reforms across four key pillars: Infrastructure, Demand Sectors, Market Transparency, and Strategic Supply.
I. Pillars of the Vision: A Holistic Framework
The transformation agenda focuses on crucial regulatory and policy interventions across the entire value chain.
Infrastructure & Connectivity: The primary strategy is the rapid expansion of the National Gas Grid (NGG). This involves authorizing new pipelines, resolving stalled projects, and prioritizing the laying of critical spur lines to connect all districts and major industrial areas. This expansion is crucial for supporting the exponential growth forecasted in the City Gas Distribution (CGD) network.
Market Transparency & Reform: The report advocates for radical market reforms to create a “free gas market”. Key initiatives include examining the feasibility of adopting an Entry-Exit tariff system and establishing an Independent System Operator (ISO) to ensure transparent, non-discriminatory access to pipeline and LNG infrastructure.
Pricing & Taxation: A central reform is the urgent plea for the inclusion of natural gas under the Goods and Services Tax (GST) regime to eliminate the cascading effect of multiple state taxes (VAT/CST). This is considered essential to make natural gas price-competitive against polluting alternatives like furnace oil and coal.
Strategic & Indigenous Supply: To boost energy security and reduce reliance on Liquefied Natural Gas (LNG) imports (which currently meet ~50% of demand), the report emphasizes developing strategic gas storage and significantly scaling up indigenous, sustainable sources like Compressed Biogas (CBG) and other waste-to-gas technologies.
II. Comparative Sectoral Demand Landscape
India’s natural gas consumption is projected to reach 260 to 300 MMSCMD by 2030 in the base case and could rise significantly higher under an accelerated policy scenario. The sectoral composition is set for a major shift.
Fertiliser Sector
Current Consumption (FY 2024): Largest consumer (~32% of total consumption).
Future Trend: Moderate demand growth; remains crucial economically and politically due to subsidies.
City Gas Distribution (CGD)
Current Consumption (FY 2024): Second largest (~20% of total consumption).
Future Trend: Expected to become the largest consumer by 2030, driven by CNG rollout for transport and PNG household connections.
Power Sector
Current Consumption (FY 2024): Significant (~14% of total consumption).
Future Trend: Increasingly vital for grid balancing and peaking power, as renewable energy share grows.
Refinery & Petrochemical Sector
Current Consumption (FY 2024): Growing (~12% of total consumption).
Future Trend: Demand to rise with Crude-to-Chemicals (C2C) projects and replacement of polluting fuels like naphtha and furnace oil
Sectoral Deep Dive: The Fertiliser Industry (Largest consumer ~32% of total consumption).
III. The Subsidy Dilemma and Natural Gas Dependency
The core of the fertiliser sector challenge lies in its heavy reliance on natural gas as a feedstock and the resulting ballooning subsidy burden on the government.
Financial Impact: Natural gas constitutes over 80% of the total urea production cost. Since the price of urea for farmers is kept artificially low and fixed, volatility in imported LNG prices directly and severely strains the public exchequer by inflating the subsidy bill.
Efficiency Gaps: Although overall efficiency has improved (with a 25% decrease in specific gas consumption per tonne of urea over time), significant variation exists among individual units. This points to the need for immediate, targeted investments to modernize underperforming facilities.
Policy Context: The existing New Pricing Scheme (NPS) (2003) and the Gas Pooling Mechanism (2015) were designed to boost efficiency and ensure uniformity of gas price inputs for urea plants, acknowledging the national strategic need for urea production.
IV. Path Ahead: Towards Sustainability and Cost Reduction
The report emphasizes a shift towards indigenous efficiency and cleaner feedstock substitution to alleviate the financial and environmental burden.
Promoting Bio-Fertilisers and Nano Urea
Fiscal Savings: Innovations like nano urea and the increased use of bio-fertilisers are projected to reduce dependency on conventional urea, potentially leading to savings of up to US$3 billion per year in subsidies and freeing up pipeline gas.
The FOM Opportunity: Fermented Organic Manure (FOM), a nutrient-rich co-product of Compressed Biogas (CBG) plants, must be commercially adopted. It improves soil health and provides an essential revenue stream for CBG producers.
CBG Integration: Replacing approximately 2 million tonnes of urea with bio-fertilisers by FY 2040 could release 3.8 MMSCMD of natural gas for other priority sectors.
Market and Policy Directives
Subsidy Inclusion for FOM: To ensure viability, the government should consider extending the fertilizer subsidy framework to include FOM and other organic fertilisers from CBG plants, making them price-competitive with urea.
Co-Marketing & Quality: Fertiliser marketing companies must be mandated to assist in the co-marketing of FOM. Clear quality standards and prescribed doses (coordinating with ICAR/KVKs) must be established for bio-manures.
Biogas Usage Mandate: To secure demand for indigenous clean fuel, the Department of Fertilizers should increase the mandated usage of biogas in fertiliser plants over a set time horizon.
Gas Procurement: Review the sourcing norms for procuring RLNG and domestic High Pressure-High Temperature (HP-HT) gas for the fertiliser sector to ensure transparency, possibly by shifting short-term procurement to the gas exchange.
Follow the full news here: Vision 2040: A Strategic Roadmap for India’s Natural Gas-Based Energy Transition