Page 38 - Policy Economic Report - December 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Key Policy developments/Significant news in Energy sector

Government Expands Refining Capacity, Boosts Biofuel & Green Hydrogen Mission

The current total refining capacity of the country is 258.1 million Metric Tonne Per Annum (MMTPA) which
is projected to increase to 309.5 MMTPA by 2030. Alongside, the overall Petrochemical Intensity Index
(PII) of the public sector oil refineries is anticipated to increase from 4.1 to approximately 9.3 upon
completion of ongoing and planned refinery projects. Government has implemented various initiatives to
promote biofuels, green hydrogen, and Liquefied Natural Gas (LNG), which inter-alia include achieving
20% ethanol blending under the Ethanol Blending Programme (EBP), and broadening the scope of
feedstock to enhance the availability of ethanol. The Pradhan Mantri Jaiv Indhan-Vatavaran Anukool Fasal
Awashesh Nivaran (PM JI-VAN) Yojana has been launched to provide financial assistance for setting up
projects for advanced biofuels, including Sustainable Aviation Fuel (SAF). For the promotion of
Compressed Biogas (CBG), the Sustainable Alternative Towards Affordable Transportation (SATAT)
scheme has been launched, and schemes like BAM (Biomass Aggregation Machinery) and DPI (Direct
Pipeline Infrastructure) have been introduced to support biomass aggregation and to connect CBG plants
to the existing pipeline network. National Green Hydrogen Mission (NGHM) has been launched with the
objective of production of 5 MMTPA green hydrogen by 2030. Government has also taken various steps
to augment the availability of LNG for various sectors which, inter-alia, includes establishment of LNG
infrastructure including LNG terminals and LNG stations.

Cleaner fuels such as biofuels, green hydrogen, and LNG have the potential to contribute to emission
avoidance across key sectors, including transport and other critical, hard-to-abate industries like cement,
iron and steel. Their adoption has the potential to contribute to the reduction of overall emission intensity
and supports the transition to a low-carbon economy, thereby aligning with national climate goals and
international commitments.

Government has Approved 25 Lakh Additional LPG Connections Under PMUY for FY 2025-26

Pradhan Mantri Ujjwala Yojana (PMUY) was launched in May, 2016 to provide deposit free LPG connection
to adult women from poor households across the country. As on 01.11.2025, there were about 10.33
crore PMUY connections across the country.

Government has recently approved the release of 25 lakh additional LPG connections under PMUY during
Financial Year 2025-26 to clear pending applications and achieve saturation of LPG access in the country.
To further improve access, the eligibility criteria have been simplified to “Adult women from poor
households based on submission of a Deprivation Declaration”.

To make LPG more affordable to PMUY consumers and ensure sustained usage of LPG by them, in May
2022 Government started a targeted subsidy of ? 200/- per 14.2 kg cylinder (and proportionately pro-
rated for 5 Kg connections) to the PMUY consumers which was subsequently increased to ? 300/- per 14.2
kg cylinder (and proportionately pro-rated for 5 Kg connections).

For FY 2025-26, the Government is providing a targeted subsidy of ? 300/- per cylinder for up to 9 refills
of 14.2 Kg cylinders per annum (proportionately pro-rated for 5 Kg connections).

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