New Delhi: With capacity utilisation at newer LNG terminals stuck around 28 per cent and concerns over uncoordinated infrastructure build-up rising, the Petroleum and Natural Gas Regulatory Board (PNGRB) has notified the LNG Terminal Regulations 2025—a sweeping framework that mandates registration, public disclosure of terminal charges, and pre-investment submissions for all entities setting up or operating LNG terminals in India.
The regulations, finalised in May 2025 after public consultations in August 2024, are applicable to all LNG terminals established on or after October 1, 2007. The move is aimed at integrating terminal planning with gas market needs, improving transparency, and resolving inefficiencies that have led to poor infrastructure utilisation.
Under the new framework, LNG terminal operators must now submit a pre-investment intimation before making a final investment decision (FID). This must be accompanied by a detailed feasibility report, business and evacuation plans, and a performance bank guarantee of ₹25 crore or 1 per cent of the project cost, whichever is lower. Upon PNGRB approval, the entity will receive a certificate of registration valid for 30 years.
Utilisation challenge and planning gap
A key trigger for the regulation has been the poor capacity utilisation of newer LNG terminals. Data from FY16 to FY25 shows that apart from the two legacy terminals at Dahej and Hazira, other terminals have operated at an average utilisation of just 28 per cent. Several of these terminals have been promoted by state-owned companies.
Currently, LNG terminals often come up with limited regulatory oversight during the early stages, and connectivity with gas pipelines is sought post-construction. This has led to creation of underutilised pipeline assets and higher tariffs, which are eventually passed on to end consumers.
To address this, the regulations require terminal developers to inform PNGRB prior to final investment, enabling the regulator to assess gas demand, location suitability, and connectivity requirements before issuing pipeline authorisations.
“The regulator will ensure an integrated development through a well-coordinated plan that aligns with the overall gas sector’s objective,” the regulations state.
Transparency provisions introduced
In a major move towards commercial transparency, the new rules require operators to disclose key charges—such as regasification fees, truck loading rates, and boil-off gas (BOG) charges—on their websites. These charges will also be accessible to PNGRB. Unlike natural gas pipelines where tariffs are regulated and published, LNG terminal charges have remained opaque until now.
While PNGRB does not intend to regulate terminal tariffs, the regulations aim to empower downstream consumers by enabling informed decisions and ensuring fair market access.
“Mandating public disclosure of regasification and related tariffs, granting PNGRB access to terminal charges, and promoting equitable access to gas for all market participants” are central objectives of the new framework.
Monitoring, compliance and penalties
Operators will be required to submit operational data every six months—in April and October. Provisions have been made to accommodate capacity expansion and change in ownership. Non-compliance could lead to suspension, penalties, or cancellation of registration, with due process guaranteed.
Impact on CGD and industrial consumers
The reforms are also significant for City Gas Distribution (CGD) companies, which are increasingly reliant on LNG amid limited domestic gas supply. Following the 12th bidding round, CGD coverage now spans the entire country, excluding islands.
Several CGD players have reached a point where they require nearly one LNG cargo per month and have the capacity to source gas from international suppliers. Industrial users in other sectors are also expected to seek better pricing terms and clearer access conditions in the years ahead.
“Several such customers in other sectors of industry are also coming up which would look for better pricing slopes for LNG contracts in the future. This would require not only competitive sourcing, but transparent access to re-gas slots, clearly disclosed tariffs, and robust downstream connectivity,” PNGRB stated.
Way forward
The regulations represent a shift toward a coordinated and demand-driven gas infrastructure ecosystem. While pipeline development has followed sectoral planning, regasification terminals have largely developed independently. By integrating LNG terminal development into the broader planning framework, the PNGRB aims to optimise infrastructure, reduce tariff burdens, and promote India’s long-term energy security vision.
The PNGRB, under the 2006 Act, had previously issued rules for LNG terminal registration in 2012. The 2025 regulations now reinforce and update that framework, incorporating the need for upstream-downstream alignment, better data collection, and consumer-focused transparency in a rapidly evolving gas economy.
