The Commission for Air Quality Management in NCR & Adjoining Areas on Wednesday recommended a uniform pricing policy for natural gas in the region pointing out that with the key commodity being outside the purview of the GST, state taxes are making it costlier.

The comments from public and stakeholders also favoured addressing the pricing of natural gas and bringing it under GST.

The air quality panel released a comprehensive sector-wise policy to curb air pollution in the NCR. It is based on recommendations of the Expert Group formed by CAQM earlier this year.

“Clean fuel transition in industrial sector is critical for finding a permanent solution to air pollution. This will require rapid transition to natural gas and reliable supply of electricity for industry. Even with the current natural gas infrastructure in Delhi and surrounding NCR districts, substantial transition is possible with targeted development,” CAQM said in the policy report.

Focus on natural gas

The policy pointed out that despite the availability of natural gas in several districts and industrial areas of NCR, there is hesitation to adopt gas on a large scale, mainly due to economic considerations.

Given the current central and state level fuel taxation policies, natural gas is more expensive than other competing mainstream and more polluting industrial fuels like coal, it said.

“It is recommended that the tax structure be rationalised for the NCR sub-regions till the time GST reforms are possible to make gas more competitive and enable its rapid adoption to replace coal and other dirty fuels in the region,” the policy added.

Delhi has already reduced taxes on natural gas. This requires a uniform policy across all the sub-regions. In fact, the CAQM directive on restrictions on industries that do not operate on gas during adverse air quality scenarios in winters, has created an opportunity for this transition, the policy report said.

As is evident from Ministry of Petroleum and Natural Gas (MoPNG) data, significant investments are underway to expand the natural gas pipeline in the region. This investment will remain sub-optimal and wasteful if critical demand for gas is not tied up, it pointed out.

“Pricing of gas will therefore play an important role in scaling up demand for gas and the scale of change may also contribute towards offsetting some of the revenue losses due to fuel tax rationalisation,” it has suggested.

Gas infrastructure

Domestic natural gas is primarily sourced from KG-D6, Mumbai offshore, Cambay Basin, Ravva Offshore, KG Basin, Cauvery basin and through import of LNG (about 50 per cent). At present, three major pipeline entities are engaged in transportation namely GAIL, RGTIL/ RGPL and GSPL. GAIL is operating about 70 per cent of the pan-India pipeline, while RGTIL and RGPL are operating 11 per cent. GSPL is mainly focused in Gujarat and accounts for 16 per cent of the total.

Major consumers are fertilizers, City Gas Distribution (CGD), power, refineries and petrochemicals.

Currently, there are 11 CGD entities in NCR. There are 812 CNG stations now, with a total steel pipeline of 18,446 inch km, and 40,435 inch km of MDPE pipeline. This expansion of infrastructure has created the opportunity to replace coal with cleaner fuels in industrial, transport and domestic sectors in the region.

There are 198 industrial areas of which 148 are connected with natural gas and the rest are also expected to be connected in the time frame of March 2022 to September 2023.

The study

The policy study was launched after the Supreme Court in December 2021 directed CAQM to find a permanent solution to the air pollution menace occurring every year in Delhi and NCR. In January 2022, the panel formed an Expert Committee headed by the Chairman Haryana State Pollution Control Board.

Based on recommendations of the Expert Group, a comprehensive sector-wise policy has been formulated by CAQM. It is broadly based on an air-shed approach for the NCR.

It also follows a differentiated approach with core focus on NCT of Delhi and NCR districts close to Delhi with plans and actions to abate air pollution under short-term (1 year), medium-term (2-3 years) and long-term (3-5 years).

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