Petrol pumps, oil depots, tank farms and import terminals in India store petroleum under the Petroleum Act, 1934 and licences issued under the Petroleum Rules, 2002. If a licensee breaks the conditions of that licence, the Act treats it as a crime, and the punishment is up to a month of simple imprisonment or a fine of up to ₹1,000. A repeat offender faces up to three months or ₹5,000. Those amounts were last changed in 1970, and the Ministry of Petroleum and Natural Gas now describes them as insignificant.

On 30 September 2026 the ministry released a draft Petroleum (Amendment) Bill, 2026 for public comment. It would take routine licence breaches out of criminal law and put them before an adjudicating officer who can levy civil penalties of up to ₹5 crore, while making unlicensed activity, licence fraud and damage to oil infrastructure serious crimes with fines of up to ₹25 crore. Comments are open until 30 October 2026.

What the 1934 Act does, and who runs it

The Act controls the import, transport and storage of petroleum and lets the central government make rules on licences, which it has done in the Petroleum Rules, 2002. Licences are issued and inspected by the Petroleum and Explosives Safety Organisation (PESO), which sits under the Department for Promotion of Industry and Internal Trade in the Ministry of Commerce and Industry. The safety standards that oil companies follow inside their plants are written by the Oil Industry Safety Directorate under the petroleum ministry, which is also the ministry that has released this draft. Three offices, in two ministries, touch the same licence.

Section 23 is the Act’s single penalty clause. It covers importing, transporting, storing or refining petroleum in breach of the rules, breaching licence conditions and obstructing inspectors, and gives all of them the same punishment. The scale of what it governs is large: PESO’s paperless licensing for retail outlets was described as covering more than 70,000 pump owners, and this blog’s map of fuel retail outlets counts about 82,000.

What the draft proposes

According to reports of the draft, it substitutes sections 23 and 25, inserts new sections 23A to 23E and amends section 24, splitting one penalty clause into separate offences:

Draft provisions as reported by Business Standard, KNN India, The South First, Deccan Chronicle, PTI (via Morung Express) and Upstox on 30 September and 1 October 2026; the draft text itself could not be opened for this piece, and reports differ slightly on which sections each provision sits in. The current penalties are from the bare text of section 23.

A civil penalty does not close the door on prosecution. Reports of the draft say other liabilities are preserved, and that separate proceedings remain possible when a licence breach endangers public safety or causes grievous hurt or death.

What the draft does not say yet

The jump in the ceiling is large: ₹2.5 crore is 25,000 times ₹1,000. But it is a ceiling, and the same ceiling would apply to a fuel station on a highway and to a coastal import terminal. Reports describe no schedule that grades penalties by the type of licence or the seriousness of the breach.

None of the coverage describes an appeal from the adjudicating officer, the officer’s rank, or which office would appoint one, beyond “authorised by the Centre”. With licensing at PESO under one ministry and the law and safety standards under another, that choice decides who actually enforces the new penalties. There is also no published baseline to judge the change against: this blog could not find a count of prosecutions or convictions under section 23.

What would fix this

• The Ministry of Petroleum and Natural Gas should write an appeal route into the bill: a time-bound appeal from the adjudicating officer to a named appellate authority, then to a tribunal or the High Court, with penalties payable or stayed on stated terms.
• The ministry should add a graded schedule beneath the ₹2.5 crore and ₹5 crore ceilings, by licence category and type of breach, so a paperwork lapse at a pump and an unsafe tank at a terminal are not judged against one cap.
• PESO should publish every adjudication order online (licensee, licence number, breach, penalty and corrective direction), as SEBI does for its adjudication orders, so the new regime is visible and consistent.
• PESO should publish annual enforcement statistics: licences in force by category, inspections, breaches found, cases under section 23 and their outcomes, so the effect of moving from criminal to civil penalties can be measured.
• The final bill should say which office appoints adjudicating officers and how OISD’s safety standards are written into licence conditions, so the three offices that touch a petroleum licence do not leave the new penalty without an owner.

These are proposals from this blog, not recommendations any agency has adopted.

How to comment

The draft and the ministry’s notice inviting comments are on the Ministry of Petroleum and Natural Gas website; the PIB release of 30 September 2026 (PRID 2316851) announced them. The deadline is 30 October 2026. Licensees, dealers’ associations and state governments, whose district authorities issue the no-objection certificates a petroleum licence needs, are the obvious respondents.

Sources and caveats

About this article: Researched, written and edited by Umashankar Triplicane Dwarakanathan, with AI research assistance; every figure is meant to trace to the primary source cited. See the Editorial Policy for how sourcing, AI use and corrections work.