Gas Stocks Set to Explode? Govt Panel Reveals Game-Changing CNG & CBG Policy!

The Petroleum and Natural Gas Regulatory Board (PNGRB) has released a report from a High-Level Expert Committee, led by former Petroleum Secretary DK Sarraf, evaluating challenges and suggesting policy interventions for India's City Gas Distribution (CGD) sector.

A primary recommendation is to reinstate priority allocation of APM (Administered Pricing Mechanism) gas for the CNG (Transport) segment, recognizing its importance for affordable public transport and air quality. The committee suggests that any APM gas shortages should be borne equally across all consuming sectors, avoiding disproportionate impact on CNG.

Further, the report advocates for including Compressed Biogas (CBG) within the Corporate Average Fuel Efficiency (CAFE) framework. Recognizing CBG as a carbon-negative fuel would encourage automakers to adopt and promote engines compatible with CNG and CBG, especially as the nation pursues cleaner energy.

The committee also proposes integrating CNG vehicles into India’s Vehicle Scrappage Policy, similar to electric and hydrogen vehicles, to accelerate the retirement of older, polluting vehicles.

CNG is framed as a vital 'transition fuel' in India's Net Zero Roadmap, offering immediate emission reduction and cost benefits while existing infrastructure can be utilized, paving a realistic path towards zero-emission goals.

To accelerate adoption, the report suggests mandating CNG use in public transport and commercial vehicles in high-pollution cities and requiring large fleet operators to convert at least 20% of their fleet to CNG. It also recommends a five-year life extension for diesel trucks retrofitted to CNG under the scrappage policy.

Impact These recommendations are poised to significantly bolster the CGD sector, drive increased adoption of CNG and CBG, and potentially lead to substantial growth for companies in this space. The immediate market reaction saw shares of Indraprastha Gas, Mahanagar Gas, and Gujarat Gas experience upward movement, indicating investor optimism about the potential policy shifts.

Rating: 8/10

Difficult Terms: APM Gas: Administered Pricing Mechanism gas, a type of natural gas whose price is controlled by the government. CGD: City Gas Distribution, a sector focused on supplying natural gas to urban households, commercial establishments, and industries. CNG: Compressed Natural Gas, a fuel made by compressing natural gas. CBG: Compressed Biogas, biogas that has been compressed and purified to be used as a fuel, often carbon-negative. CAFE Framework: Corporate Average Fuel Efficiency standards, which set benchmarks for fuel economy for vehicle manufacturers. OEMs: Original Equipment Manufacturers, the companies that produce vehicles. Net Zero Roadmap: A plan to balance greenhouse gas emissions with removals, aiming for net-zero emissions. Diesel Trucks Retrofitted: Older diesel trucks that have been modified to run on a different fuel, such as CNG.