The expansion of piped natural gas and compressed natural gas networks in Assam’s commercial and industrial sectors has slowed sharply because imported gas has become much more expensive amid the West Asia crisis.

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• Imported gas prices have reportedly risen to around US$30 per MMBtu, while domestic gas available under the administered pricing mechanism is around US$7 per MMBtu. 
• This large price difference has made new connections less attractive for many commercial and industrial consumers.

Why Does the Price Difference Matter?

• Under the administered pricing mechanism, certain domestically produced gas is supplied at regulated prices, particularly to priority sectors such as domestic piped natural gas and compressed natural gas for transport.
• Commercial and industrial users often depend more on market-priced domestic gas or imported liquefied natural gas. 
• Higher input costs therefore affect the viability of expanding gas networks.
• Assam already has a growing gas distribution network. Assam Gas Company Limited serves Upper Assam, while other authorised city gas distribution companies operate in different parts of the State. 
• The Petroleum and Natural Gas Regulatory Board regulates the development of these networks.

Possible Relief from Upper Assam Gas

A potential solution is greater use of locally produced natural gas.

• Gas produced by Oil India Limited in Upper Assam is expected to be supplied towards central and western Assam.
• The gas will be transported through the North-East Natural Gas Pipeline Grid, being developed by Indradhanush Gas Grid Limited.
• The pipeline network is intended to improve gas evacuation and connect domestic gas sources with consumption centres.
• Assam Gas Company Limited already operates an extensive gas distribution network in Upper Assam, serving industrial, commercial and domestic consumers.

Why Is PNG and CNG Important?

• Piped natural gas provides a continuous fuel supply to households and commercial establishments, while compressed natural gas is mainly used as a transport fuel.
• Expanding these networks can help Assam:
  • diversify its energy mix;
  • reduce dependence on imported gas;
  • provide a relatively cleaner fuel for transport and industry; and
  • strengthen the regional natural-gas economy.

Exam Hook: Key Takeaway

Assam’s experience shows that affordable domestic gas supply and adequate pipeline infrastructure are crucial for expanding cleaner natural-gas use and reducing import dependence.

One-line wrap: For Assam, connecting locally produced gas with expanding consumer markets could determine how quickly its cleaner-fuel economy grows.