The draft Petroleum (Amendment) Bill, 2026, released by the Ministry of Petroleum and Natural Gas on September 30, proposes major changes to penalties related to petroleum activities. It aims to decriminalise minor breaches of petroleum licence terms but introduces heavy fines and jail terms for serious offences such as unauthorised operations, fraudulent licensing, pilferage, and damage to critical petroleum infrastructure. The bill is open for public consultation and will take effect only after enactment and notification.
- Minor breaches of licence terms will be decriminalised and subject to civil penalties.
- Unauthorised petroleum activities may lead to imprisonment up to three years and fines up to ₹25 crore.
- Fraudulent acquisition of petroleum licences can result in up to five years in jail and fines.
- Damage to critical petroleum infrastructure may attract up to 10 years imprisonment and fines up to ₹25 crore.
- Penalties for repeat offences are significantly higher.
Why is the Petroleum Bill being amended?
The existing penalty framework under the Petroleum Act, 1934, has remained largely unchanged since 1970. Since then, petroleum prices and infrastructure have grown dramatically. For example, petrol prices have increased from Rs. 0.90 per litre in 1970 to between Rs. 95 and Rs. 105 in 2026, a rise of over 10,000%. The number of refineries has increased from six to 23, with refining capacity growing from 18.4 million tonnes to over 258 million tonnes annually. The government believes the current generic penalties do not provide adequate deterrence for different offences and that breaches of licence conditions should not always be criminal offences.
What changes does the draft bill propose for licence breaches?
The draft bill proposes to decriminalise breaches of licence terms and conditions. Instead of criminal prosecution, an adjudicating officer appointed by the central government can impose civil penalties. For a first breach, the fine can be up to ₹2.5 crore, and for subsequent breaches, up to ₹5 crore. The adjudicating officer may also recommend suspension or revocation of the licence. This approach aims to regulate minor violations through administrative action rather than criminal law.
What are the penalties for unauthorised petroleum activities?
Activities such as production, import, storage, refining, transportation, and blending of petroleum products require a licence. Carrying out these activities without a licence will attract stricter criminal penalties. Offenders may face imprisonment of up to three years, fines up to ₹25 crore, or both. If the violation continues, an additional fine of up to ₹10 lakh per day may be imposed.
How does the bill address fraudulent licensing?
Obtaining a petroleum licence fraudulently, dishonestly, or through misrepresentation or impersonation is a serious offence. The draft bill proposes imprisonment of up to five years, fines, or both for such acts. This aims to deter dishonest practices in the licensing process.
What are the penalties for damaging petroleum infrastructure?
The bill introduces specific offences for damaging or destroying petroleum facilities, pilfering petroleum, or endangering public safety. For a first offence, imprisonment can extend up to five years and fines up to ₹15 crore. Repeat offences may lead to imprisonment up to seven years and fines up to ₹25 crore. The central government can notify certain facilities as "critical petroleum infrastructure." Damage to these critical facilities may result in imprisonment up to 10 years and fines up to ₹25 crore or the cost of the damage, whichever is less.
Are there penalties for obstructing inspections and safety violations?
Obstructing authorised inspection or sampling remains a criminal offence. The first offence may result in up to three months' simple imprisonment or a fine up to ₹2,500, or both. Repeat offences can lead to up to one year imprisonment or fines up to ₹10,000. The bill also proposes fines for breaching warning label requirements on petroleum containers, with penalties increasing for repeat violations.
How will offences be tried under the new bill?
The draft removes outdated jurisdiction references and states that no court below the level of Chief Metropolitan Magistrate or Chief Judicial Magistrate will try offences unless specially empowered by the central government. It also allows the application of the Bharatiya Nagarik Suraksha Sanhita, 2023, for complaints, investigations, and trials under the Petroleum Act.
What is the current status of the draft Petroleum (Amendment) Bill, 2026?
The bill is currently open for public consultation. It will come into force only after it is enacted by the legislature and officially notified. The proposed changes aim to modernise the regulatory framework for petroleum activities, balancing administrative enforcement with strong deterrents against serious offences.
