Government Approves New Incentive Scheme for Promotion of Domestic PNG Connections

The oil ministry has approved an incentive scheme aimed at boosting domestic Piped Natural Gas (PNG) connections across India. Effective from September 1, 2026, the scheme is designed to speed up the expansion of active PNG connections, helping more households switch to piped natural gas for cooking sooner rather than later.

What is India’s New Incentive Scheme for PNG?

1. The scheme comes into effect from September 2026, aimed at encouraging CGD companies to expand household PNG connections
2. CGD companies will receive an additional 200 standard cubic metres of cheaper domestic gas for every household that gets connected and starts actively using and paying for PNG
3. The additional gas allocation is expected to lower the overall cost of sourcing gas for distributors
4. The scheme also pushes companies to activate existing inactive PNG connections and expand their networks to reach more households
5. According to the Ministry of Petroleum and Natural Gas, the scheme could help companies recover investment in new connections in around three years, down from the current 10 years
6. India is the world's second-largest LPG importer, depending on overseas supplies for around 60% of its LPG needs, mostly from the Middle East
7. Ongoing conflict in the Middle East has disrupted fuel shipments and raised supply and cost concerns
8. India imported around 22 million metric tonnes of LPG in 2025, spending nearly $12 billion, largely from Middle East sources
9. The government is using the current supply pressure as an opportunity to speed up PNG expansion
10. India currently has around 17.4 million domestic PNG connections, compared to about 331.4 million active household LPG customers as of July 1
11. This gap highlights significant potential for city gas companies to add more PNG customers
12. For households, PNG delivers cooking gas directly through a pipeline, removing the need to order and replace LPG cylinders.

Aim of Incentive Scheme for Promotion of Domestic PNG Connections

The scheme's main goal is to encourage City Gas Distribution (CGD) companies to actively convert unbilled connections into working, billed gas connections, while also pushing them to expand the PNG network into new areas. Currently, India has around 1.74 crore domestic PNG connections. The government is hoping this scheme will accelerate that number by making expansion more financially attractive for CGD companies.

Eligible Entities Under Incentive Scheme PNG

Eligible CGD entities will receive an additional 200 standard cubic metres (SCM) of domestically-produced, lower-priced APM gas for every incremental billed domestic PNG connection achieved during the performance period, over and above a fixed threshold set for each geographical area. 

This additional gas allocation is meant to replace the costlier Liquefied Natural Gas (LNG) that CGD companies currently use for their Compressed Natural Gas (Transport) segment, helping reduce their overall gas-sourcing costs.