Subsidies And Pipelines: The Double-Engine Working To Expand Gas Usage In India

The central government seems focussed on providing gas coverage to all households in India. To this end, a two-pronged strategy appears to be in place. One, increase the coverage of gas pipelines. Two, increase the number of people using LPG cylinders and incentivise its usage through the Pradhan Mantri Ujjwala Yojana, and subsidies.

India is expanding its gas pipeline network to more cities, aiming to increase the share of gas in the energy mix to 30 per cent. Natural gas, emitting 50-60 per cent fewer pollutants than coal, is pivotal in India's transition to net-zero emissions by 2070.

With a Rs 3 lakh crore ($40 billion) investment plan by February 2026, India aims to develop pipelines, LNG re-gasification terminals, city gas networks, and explore natural gas resources.

Gas pipelines serve as vital conduits for transporting natural gas from sources to consumer markets, ensuring efficiency and security in distribution.

Presently, India boasts a 33,347 kilometres-long network of authorised pipelines common carriers, tie-in connectivity, and dedicated pipelines. Out of this, 24,723 kilometres are already operational and an additional 10,494 kilometres of pipelines are under construction, according to Petroleum and Natural Gas Regulatory Board (PNGRB) data.

There is also a significant increase in Compressed Natural Gas (CNG) stations, rising from 900 in 2014 to approximately 2,400 by 2020, with a projected target of 10,000 by 2030.

In the fiscal year 2021-2022, Oil and Gas Public Sector Undertakings (PSUs) operated a network of LPG pipelines spanning 5,098 km across the nation. During this period, Minister of State in the Ministry of Petroleum and Natural Gas, Rameshwar Teli, revealed that these pipelines facilitated the transportation of a substantial 8.926 million metric tons (MMT) of LPG.

As of October 2023, authorised City Gas Distribution (CGD) entities have provided 1.19 crore PNG connections, including to BPL families. PNGRB gave permission for CGD networks in 300 areas covering nearly all of India's population and 88 per cent of its land. Their goal is to establish about 12.50 crore PNG connections by 2032.

Concurrently, India experienced a notable surge in LPG connections over the past nine years. The number of active domestic LPG consumers has surged from 14.52 crore in April 2014 to 31.36 crore as of March 2023. This remarkable increase is largely credited to the Pradhan Mantri Ujjwala Yojana (PMUY), which has substantially expanded LPG coverage from 62 per cent in 2016 to an impressive 104.1 per cent in 2022.

The Significance of LPG Subsidies for Lower and Middle-Class Consumers

LPG subsidies have been a recurrent feature of electoral promises by parties across various states, and are perceived as a strategic manoeuvre to sway the votes of the influential demographic of women.

High LPG prices often lead to discontent among voters, particularly in rural and lower-income areas where access to alternative fuels is limited. Recognising the significant impact of energy costs on voter sentiment, political parties frequently leverage promises of LPG subsidies or price controls to influence electoral outcomes.

Recently, Prime Minister Narendra Modi announced that LPG cylinder prices will be decreased by Rs 100, a move expected to benefit nearly 33 crore households, including over 10 crore underprivileged families covered by the PM Ujjwala Yojana (PMUY). This reduction supplements the existing Rs 300 subsidy per cylinder for PMUY beneficiaries.

Last August too, ahead of Assembly polls in five states, the centre reduced LPG cylinder prices by Rs 200 and expanded PMUY coverage by 75 lakh households.

While LPG cylinders offer immediate benefits, piped connections offer long-term convenience and sustainability. Investing in piped gas infrastructure alongside LPG subsidies can ensure a seamless transition towards cleaner and more efficient energy distribution, benefiting both consumers and the environment in the long run.