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Draft policy to push CNG, PNG in cities

The policy is part of the Centre’s strategy to ensure a smooth passage in states for the Narendra Modi government’s plan to help 400 districts, covering 70% of the population, breathe easy by providing clean-burning CNG (compressed natural gas) and PNG (piped natural gas) services at an estimated investment of Rs 90,000 crore.

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Last Updated: Jan 23, 2020, 11.37 AM IST
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(This story originally appeared in on Jan 22, 2020)
NEW DELHI: A draft city gas policy for states suggests standardised charges and time-bound permission for setting up CGD (city gas distribution) networks, conversion of public transport fleet to CNG, creation of green corridors for inter-city traffic and fiscal incentives for gas-driven mobility akin to electric vehicles to push natural gas as automotive fuel.

The policy is part of the Centre’s strategy to ensure a smooth passage in states for the Narendra Modi government’s plan to help 400 districts, covering 70% of the population, breathe easy by providing clean-burning CNG (compressed natural gas) and PNG (piped natural gas) services at an estimated investment of Rs 90,000 crore.

Oil minister Dharmendra Pradhan is scheduled to release the draft policy for discussion at a national workshop on CGD (city gas distribution) schemes and conclave to promote gas-driven economy organised to bring states on board.

City gas licences are auctioned by the Centre but the utilities need a slew of permissions from the state government agencies before they can start work. Availability of land and securing RoU (right of use) for laying pipelines – often leading to legal challenge – are the biggest challenge. These affect project economics and funding plans as well as expose licence holders to the possibility of regulatory penalty or cancellation.

That is why, the sources told TOI, the draft policy is expected to propose standardisation of the road restoration/permission charges and time-bound permissions for laying pipelines and setting up CNG station in accordance with local conditions.

The draft is also expected to suggest reduced taxes, waiver of registration and toll charges for gas-driven transport just as in case of electric vehicles. The policy also suggests a review of VAT rates on CNG to bring uniformity across states. It is also expected to exempt VAT and CST exemption to makers of equipment related to CNG/PNG services.

Industry players said suggestions for a single-window system for time-bound clearances, priority allotment of land and conversion of public transport fleet will be comparatively easier for states to accept and implement, especially if they are taken up with some cheap financing options. But suggestions on financial incentives will take a lot of persuasion to be accepted as they involve reduction in VAT and forgoing revenue.

The CGD drive is part of the Centre’s bid to cut India’s carbon footprint by raising the share of gas in energy basket from 6% to 15% by 2023. Only 34 GAs in the country had city gas networks till 2014, when Modi became PM. Since then, his government has given out CGD licences for 174 GAS that will cover 70% of the population and 53% of the country’s geographical area spanning 400 districts across 27 states.

The push for natural gas has seen the number of households with PNG connections rising to 55 lakh and CNG stations to 1,838, marking a growth of 14-15% in the last five years. Total PNG connections are expected to rise to over 4 crore, while the number of CNG stations are expected to swell to 10,000 by 2024 as more cities get city gas service.
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