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Fitch Ratings in its latest report has said that price volatility and infrastructure constraints will challenge India's target of increasing the share of natural gas in its primary energy to 15 per cent by 2030 from 6 per cent in 2017. It said progress on the target has been minimal - 6 per cent share in 2021 - as natural gas growth has not managed to outpace total energy growth. It noted that this is despite resilient demand from city gas distribution (CGD) networks and rising domestic production.

The report stated that the government had in 2017 set a target of raising the share of natural gas in the primary energy consumption basket with a view to cutting down emissions. However, it said the demand for the fuel is rising at a slower rate, with current growth rates only around 53 per cent of levels required for the country to meet a 15 per cent gas use target. Gas demand by 2030 will only reach 326 million standard cubic meters per day at current 4-5 per cent growth rates, much lower than the 611 mmscmd of consumption needed to meet the 15 per cent energy mix goal.

It said ‘we believe that natural gas demand from price-sensitive industrial and power sectors may be limited in times of rising prices, as they switch to cheaper alternate fuels in the absence of robust emission norms’. Gas adoption for mobility and household fuel may also slow when its price benefit against alternate fuels decreases. It saw inadequate gas pipeline network and expectation of execution delays in some under-construction projects may limit natural gas demand growth to lower than its intrinsic levels, even in times of low prices.