New Delhi, May 27 -- The central government is considering recovering royalties on natural gas that oil and gas producers flare from domestic fields, amid concerns that fuel equivalent to more than 800MW of electricity generation is being wasted every day even as India imports half the gas it consumes, people familiar with the matter said.

The move could revive a long-running dispute over whether flaring is "avoidable" and therefore subject to royalty payments under existing regulations. While rules framed by the Directorate General of Hydrocarbons (DGH) require operators to pay royalty on avoidable flaring, companies have traditionally argued that much of the gas burnt during production falls under the category of "unavoidable" losses a...