Petroleum Amendment Bill proposes up to Rs 25 crore fine for unlicensed activities

The government proposed amendments to the Petroleum Act, 1934, including decriminalising minor licence breaches and introducing graded penalties. The draft Petroleum (Amendment) Bill, 2026 proposes civil penalties for regulatory violations and tougher punishments for serious offences involving petroleum operations and infrastructure

New Delhi: The government on Wednesday proposed decriminalising breaches of licence conditions under the Petroleum Act, 1934 and introduced a graded penalty framework, including civil penalties for regulatory violations and tougher punishment for serious offences.

The draft Petroleum (Amendment) Bill, 2026 was put out by the Ministry of Petroleum and Natural Gas for public and industry comments as part of the pre-legislative consultation process.

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Stakeholders and members of the public can submit their comments by October 30, 2026, the ministry said. The proposed amendments seek to replace the existing general offence provision under Section 23 of the Petroleum Act with specific offences and penalties.

Under the draft, carrying out an activity requiring a licence without obtaining one could attract imprisonment of up to three years or a fine of up to Rs 25 crore or both. A continuing violation could attract an additional fine of up to Rs 10 lakh per day, according to the government.

Fraudulently obtaining a licence through misrepresentation, impersonation or dishonest means could attract imprisonment of up to five years or a fine or both. In addition, the draft also proposes imprisonment of up to five years or a fine of up to Rs 15 crore for the first offence involving damage to petroleum facilities, pilferage or endangering the safety of people.

For a second or subsequent offence, imprisonment could extend to seven years and the fine to Rs 25 crore. Damage to critical petroleum infrastructure could attract imprisonment of up to 10 years and a fine of up to Rs 25 crore or the cost of the loss, destruction or damage whichever is less.

For breaches of licence terms and conditions, the draft proposes an administrative mechanism under which an adjudicating officer could impose a civil penalty of up to Rs 2.5 crore for the first breach and up to Rs 5 crore for subsequent breaches.

“For the purpose of this sub-section, the expression “licensed activity” means any activity relating to production, import, storage, refining, transportation, or blending of any petroleum or petroleum product that requires a license to be obtained under the provisions of section 3, section 4 or section 5 or any of the rules made thereunder,” it added.

According to the ministry, the adjudicating officer could also direct the licence holder to take corrective action and recommend suspension, revocation or curtailment of the licence.

It said the proposed changes aim to decriminalise minor regulatory violations while maintaining deterrence against offences that pose risks to petroleum operations, public safety and critical infrastructure.