**Executive Summary**
The Government has taken several measures to enhance natural gas availability for power generation. These include infrastructure development, policy reforms, and market liberalization. The Ministry of Power has directed maximization of power generation from gas-based stations during specific periods in 2024 and 2025.
**Key Points / Main Content**
* **Enhancing Natural Gas Availability:**
* Expansion of the National Gas Grid.
* Introduction of a unified tariff for natural gas.
* LNG under Open General Licence (OGL) category, allowing free import.
* Nil customs duty on LNG used for electricity generation.
* Allocation of domestic gas to CNG/PNG as a priority sector.
* Marketing and pricing freedom for gas from specific areas (high pressure/temperature, deep water, coal seams).
* Promotion of Sustainable Alternative Towards Affordable Transportation (SATAT) for CBG.
* **Increasing Domestic Gas Production:**
* Implementation of Hydrocarbon Exploration and Licensing Policy (HELP).
* Policy framework for Coal Bed Methane (CBM) monetization (2017).
* Discovered Small Field policy (2018).
* Policy reforms in 2019 to promote ease of doing business, including relaxed processes and approvals.
* Removal of Revenue Share from Category II & III basins (except windfall gains).
* Royalty Holiday for Deep & Ultra-deep blocks.
* Concessional Royalty Rates and fiscal incentives for early monetization.
* Market price discovery through e-bidding (since 2020).
* 20% premium allowed over Administered Price Mechanism (APM) prices for new wells in 2023.
* **Gas-Based Power Plant (GBP) Utilization:**
* Schemes for procurement of power from GBPs during peak demand periods (2023, 2024, 2025).
* Minimum Off-take Guarantee (MGO) provided to selected GBPs.
* Ministry of Power directions to maximize generation from gas-based stations (May-June 2024, May-June 2025).
**Impact Analysis**
**Stakeholder: Domestic Gas Producers**
* **Impact:** Able to sell up to 500 mmscm or 10% of annual production through gas exchanges. Benefit from pricing and marketing freedom.
* **Action Required:** Utilize gas exchanges authorized by PNGRB for gas sales.
**Stakeholder: LNG Buyers**
* **Impact:** Able to freely import LNG based on commercial terms. No customs duty on LNG for electricity generation.
* **Action Required:** Import LNG as per requirements.
**Stakeholder: Generating Companies**
* **Impact:** Can generate power from LNG and sell to customers. Benefit from nil customs duty on LNG imports.
* **Action Required:** Import LNG, generate power, and sell to customers.
**Stakeholder: Gas-Based Power Plants (GBPs)**
* **Impact:** Increased utilization through schemes and directives.
* **Action Required:** Participate in competitive bidding for power procurement during peak demand periods.
**Stakeholder: Consumers**
* **Impact:** Improved electricity supply, especially during peak demand periods. Increased system reliability.
* **Action Required:** N/A
Key Entities Referenced
Electricity Act: Law used for defining a generating company to allow nil customs duty on LNG imports.
Ministry of Petroleum & Natural Gas: The ministry responsible for measures to enhance natural gas availability for power generation.
Hydrocarbon Exploration and Licensing Policy (HELP): A policy for awarding exploration acreages, shifting from Production Sharing to Revenue Sharing mechanism.
PNGRB: Authority that authorizes gas exchanges where domestic gas producers can sell gas.
Ministry of Power: Ministry which implemented schemes for procurement of power from Gas Based Plants (GBPs) during peak demand periods.
Ministry of Petroleum & Natural Gas
Government Enhances Natural Gas Availability to
Support Power Generation
प्रव तथ: 11 DEC 2025 6:56PM by PIB Delhi
Government have taken various measures to enhance the availability of natural gas for power generation
which, inter-alia, includes expansion of National Gas Grid to connect domestic gas sources as well as
Liquefied Natural Gas (LNG) terminals to the power plants, introducing a unified tariff, setting up of LNG
Terminals, allowing the domestic gas producers who have been granted pricing and marketing freedom to
sell domestic gas up to 500 mmscm or 10% of annual production from their contract area whichever is
higher, per year through gas exchanges authorized by PNGRB, etc.
Further, Government have placed Liquefied Natural Gas (LNG) under the Open General Licence (OGL)
category. This allows buyers to freely import LNG as per their requirement on mutually agreed
commercial terms with suppliers. Government have also made provisions for Nil customs duty on import
of LNG, if it is used for generation of electricity by a generating company as defined in section 2(28) of
Electricity Act, 2003 (36 of 2003) to supply electrical energy or to engage in the business of supplying
electrical energy to the grid. Gas based power plants are free to import the LNG, generate power and sell it
to customers.
Government have taken multiple steps to increase share of Natural Gas in primary energy mix. These,
inter-alia, includes expansion of National Gas Grid Pipeline, expansion of City Gas Distribution (CGD)
network, setting up of Liquefied Natural Gas (LNG) Terminals, allocation of domestic gas to Compressed
Natural Gas (Transport) / Piped Natural Gas (Domestic) CNG(T)/PNG(D) as priority sector, allowing
marketing and pricing freedom with a ceiling price to gas produced from high pressure/high temperature
areas, deep water & ultra-deep water and from coal seams, Sustainable Alternative Towards Affordable
Transportation (SATAT) initiatives to promote CBG etc..
For increasing domestic gas production, Government of India has notified Hydrocarbon Exploration and
Licensing Policy (HELP) for the award of exploration acreages shifting from Production Sharing
mechanism to Revenue Sharing mechanism. Government further notified policy framework for early
monetization of Coal Bed Methane (CBM) (2017), Discovered Small Field policy (2018), policy reforms
in 2019, where many of the processes and approvals were relaxed to promote “Ease of Doing Business”,
Revenue Share from Category II & III type of basins were removed, except for windfall gains, 7 years
Royalty Holiday for Deep & Ultra-deep blocks, concessional Royalty Rates for Deepwater and for ultra-
deep water blocks, and fiscal incentives have been provided for early monetization of fields along with
Marketing and Pricing freedom for natural gas. Further, Government in 2020 allowed market price
discovery through e-bidding system and in 2023 permitted a premium of 20% over the Administered Price
Mechanism prices for gas produced from new well and well interventions of Oil and Natural Gas
Corporation Limited & Oil India Limited from their nomination fields.
Ministry of Power has informed that existing Gas-Based Plants (GBPs) in the country remain
underutilized due to the high cost of electricity generation. To meet increased demand during crunch
periods, the Ministry of Power implemented Schemes for procurement of power from GBPs during peakdemand periods in 2023, 2024 and 2025 through competitive bidding. Selected GBPs have been provided
with a Minimum Off-take Guarantee (MGO). During the crunch periods of 2023 (April–June 2023), 2024
(March–June 2024) and 2025 (March–October 2025), energy procured from the selected GBPs under
these schemes was 317 MU, 482 MU and 1,477 MU respectively. This Scheme, inter-alia, helped in
improving the utilization of gas-based assets, provided additional peak support to the grid, and contributed
to maintaining system reliability during periods of elevated demand. The PLF of gas-based power plants
has increased from 11.4% during 2022-23 to about 15 % during 2024-25.
In addition, Ministry of Power have issued directions under Section 11 of the Electricity Act for
maximization of generation from gas-based stations during the periods 26th May 2025 to 30th June 2025
and 1st May 2024 to 30th June 2024.
Policy initiatives to boost gas-based power generation and improve Plant Load Factor (PLF) of gas-based
plants are expected to strengthen energy security by diversifying the energy mix and reducing reliance on
coal and oil.
This information was given by the MINISTER OF STATE IN THE MINISTRY OF PETROLEUM AND
NATURAL GAS SHRI SURESH GOPI, in a written reply in Lok Sabha today.
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MONIKA
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