₹25 crore fine, 10-yar jail: What draft Petroleum Bill proposes | Explained

The government has proposed decriminalising breaches of terms and conditions of petroleum licences and tougher criminal penalties for unauthorised operations, fraudulent licensing, pilferage and damage to critical petroleum infrastructure.

The proposals are part of draft Petroleum (Amendment) Bill, 2026, which was released by the Ministry of Petroleum and Natural Gas on September 30 for public consultation.

The draft bill, in an explanatory note, states that the penalty provisions have remained "largely the same" since the Petroleum (Amendment) Act, 1970.

The government has sought to put the change in perspective by comparing the value of petroleum products and infrastructure then and now.

"In 1970, the price of petrol was Rs. 0.90 per litre and in 2026 it fluctuates between Rs. 95 and Rs. 105, which is an increase of over 10,000%," the explanatory note said.

It also noted that the number of operational refineries has risen from six in 1970, with annual refining capacity of 18.4 million tonnes, to 23 refineries with capacity of more than 258 million tonnes in 2026.

According to the government, the existing Section 23 creates a generic penalty framework that does not provide specific deterrence against different types of offences and has also resulted in breaches of licence conditions becoming criminal offences.

"The objective of the amendments proposed is to rationalise the otherwise generic offence presently under S. 23, Petroleum Act, 1934," it said.

Licence breaches to attract civil penalties

The proposed framework would "de-criminalise regulatory issues such as breach of terms and conditions of licenses" and provide for civil penalties through an administrative mechanism.

An adjudicating officer appointed by the central government could direct the licence holder to take corrective measures and impose a civil penalty of up to ₹2.5 crore for the first breach and up to ₹5 crore for a second or subsequent breach.

The adjudicating officer could also recommend suspension, revocation or curtailment of the licence to the licensing authority.

Up to ₹25 crore fine for unauthorised activity

The government, however, proposes stronger criminal provisions for petroleum activities carried out without the required licence.

The provision would cover activities relating to production, import, storage, refining, transportation and blending of petroleum or petroleum products that require a licence under the Act or rules.

The note says that since licence requirements would be limited to specified activities and breaches of licence conditions would be decriminalised, "it is therefore necessary to create sufficient deterrent against undertaking activities that mandate a license, without obtaining the required license."

Such an offence could attract imprisonment of up to three years, a fine of up to ₹25 crore, or both.

In case of continuing contravention, an additional fine of up to ₹10 lakh for every day of violation has been proposed.

Fraudulent licences, pilferage to face criminal action

Obtaining a petroleum licence fraudulently, dishonestly or through misrepresentation or impersonation could attract imprisonment of up to five years, a fine, or both.

The draft also proposes specific offences for causing damage or destruction to petroleum facilities, pilfering petroleum or endangering the safety of people.

For a first offence, the punishment could extend to five years' imprisonment or a fine of up to ₹15 crore, or both. For a second or subsequent offence, imprisonment could extend to seven years and the fine could go up to ₹25 crore.

Critical petroleum infrastructure

The draft provides for the central government to notify certain petroleum facilities or infrastructure as "critical petroleum infrastructure".

Causing physical damage to such notified infrastructure could attract imprisonment of up to 10 years and a fine of up to ₹25 crore or the expenses incurred for the loss, destruction or damage, whichever is less.

The proposed framework also makes abetment, attempt and conspiracy to commit the specified petroleum offences punishable.

Penalties for safety violations

The draft proposes specific punishment for knowingly breaching requirements relating to warning labels on petroleum receptacles where the breach endangers the safety of any person.

Such an offence could attract a fine of ₹10 lakh for the first offence and ₹20 lakh for a second or subsequent offence.

Obstructing authorised inspection or sampling would also remain a criminal offence, with enhanced penalties proposed for repeat violations.

For the first offence, the punishment could extend to three months' simple imprisonment or a fine of up to ₹2,500, or both. A subsequent offence could attract up to one year in prison or a fine of up to ₹10,000, or both.

Failure to report accidents

The draft retains provisions relating to reporting petroleum-related accidents but proposes enhanced punishment.

Failure to provide information as required under Section 27 could attract up to one month's simple imprisonment or a fine of up to ₹5,000, or both, for the first offence.

For a second or subsequent offence, the punishment could extend to one year or a fine of up to ₹20,000, or both.

Wider confiscation powers proposed

In addition to petroleum and the receptacles in which it is found, facilities, works, equipment and materials built or used to undertake an offence could also be confiscated.

The draft further proposes changes to the jurisdiction provisions of the Act by removing the reference to the pre-Independence concept of "Presidency-towns".

No court below the level of a Chief Metropolitan Magistrate or Chief Judicial Magistrate would try an offence under the Act unless specially empowered by the central government.

The draft also explicitly provides for the application of the Bharatiya Nagarik Suraksha Sanhita, 2023, to filing of complaints, investigation and trial of offences under the Petroleum Act.

The draft Petroleum (Amendment) Bill, 2026 is currently at the consultation stage and will come into force only after the proposed legislation is enacted and notified.