Incentive Scheme for Promotion of Domestic PNG Connections

Why in News?

• The Incentive Scheme for Promotion of Domestic PNG Connections was launched on August 18, 2026. The scheme came into effect on September 1, 2026 and will operate in two tranches spread over six months. It provides additional domestically produced APM gas to City Gas Distribution entities that add active, billed household PNG connections beyond prescribed targets. The scheme seeks to improve access to clean, safe and affordable piped cooking gas.

What is Piped Natural Gas?

• Piped Natural Gas is natural gas supplied directly to households through a network of underground pipelines. It is mainly used as a cooking fuel.
• Unlike Liquefied Petroleum Gas, PNG does not require households to book, store or replace cylinders. Consumption is measured through a meter, and consumers pay according to the quantity used.

PNG forms part of a wider City Gas Distribution network, which supplies natural gas to:

• Households
• Commercial establishments
• Industrial units
• Transport vehicles through CNG stations

What is a City Gas Distribution Network?

• A City Gas Distribution network consists of pipelines and associated facilities developed to supply natural gas within an authorised area.
• CGD networks are developed by entities authorised by the Petroleum and Natural Gas Regulatory Board.
• A Geographical Area is a specific region assigned by PNGRB to an authorised entity for developing and operating the CGD network.

Status of Domestic PNG Connections in India

• PNGRB has authorised CGD entities in 309 Geographical Areas. Together, these areas cover the entire mainland of India.As of August 18, 2026, India had approximately 1.74 crore domestic PNG connections.
• Although geographical authorisation has expanded, creating an authorised CGD area does not automatically mean that every household is connected. Pipeline construction, last-mile connections, consumer registration and conversion of inactive connections into billed connections remain important tasks.

About the Incentive Scheme

The Incentive Scheme for Promotion of Domestic PNG Connections aims to accelerate the addition of active household PNG connections.

Its major objectives are to:

• Convert unbilled connections into active, billed connections.
• Encourage CGD companies to connect households more rapidly.
• Extend pipeline networks to new localities.
• Improve access to clean and convenient cooking fuel.
• Reduce the time required by companies to recover the cost of household connections.

The scheme will be implemented in two tranches over six months.

How Does the Incentive Mechanism Work?

• A minimum number of connections has been prescribed for every Geographical Area.
• During the performance period, an eligible CGD entity must add billed domestic PNG connections beyond this minimum threshold.
• For every eligible incremental connection, the entity will receive an additional allocation of 200 Standard Cubic Metres of gas.

What is an Incremental Connection?

• An incremental connection is an additional active and billed domestic PNG connection created beyond the minimum target fixed for a Geographical Area.
• Thus, the scheme rewards actual gas usage rather than the mere installation of an unused pipeline or meter.

What is a Standard Cubic Metre?

• A Standard Cubic Metre is a standard unit used for measuring the volume of gas under specified temperature and pressure conditions.

Why is APM Gas Provided as an Incentive?

• The additional allocation will consist of domestically produced gas supplied under the Administered Price Mechanism.
• APM gas is generally priced lower than imported Liquefied Natural Gas. The additional APM gas will replace costlier LNG presently purchased by CGD entities for their Compressed Natural Gas transport segment.

This mechanism will:

• Reduce the overall gas-purchasing cost of CGD companies.
• Improve the commercial viability of domestic PNG connections.
• Encourage faster expansion into new residential areas.
• Allow companies to recover their capital expenditure more quickly.

The payback period for the capital spent on a household connection is expected to decline from approximately ten years to nearly three years.

Therefore, the scheme aligns the commercial interests of CGD companies with the national objective of expanding clean household energy.

Benefits of PNG for Households

Safe and Secure Supply

• PNG is supplied through underground pipelines at low pressure. Households do not need to store or handle gas cylinders.
• Natural gas is lighter than air and generally rises and disperses when released. However, regular inspection, leak detection and adherence to safety standards remain essential.

Everyday Convenience

PNG provides a continuous household supply. Consumers need not book cylinders, wait for delivery or replace empty cylinders.

This is particularly useful for:

• High-rise residential buildings
• Densely populated urban colonies
• Large housing complexes
• Households with regular cooking requirements

Metered Billing

• Consumers pay for the gas they actually use. Billing is based on meter readings, similar to electricity and water services.

Lower Household Expenditure

• On a comparable energy basis, PNG generally costs less than LPG. Regular users may therefore experience a reduction in monthly cooking-fuel expenditure.

Cleaner Cooking Fuel

PNG burns more cleanly than many conventional cooking fuels and produces fewer local air pollutants.

It can:

• Improve indoor air quality
• Reduce smoke and soot
• Support cleaner urban energy use
• Lower carbon emissions compared with more polluting fuels

However, natural gas remains a fossil fuel. Therefore, leak prevention and methane-emission control are important for achieving its environmental benefits.

Assured Availability

• Pipeline supply reduces dependence on cylinder transportation and delivery logistics. It provides a more continuous and predictable cooking-fuel supply.

Initiatives Supporting PNG Expansion

Accelerated Approval Framework

An Accelerated Approval Framework has been introduced under the Natural Gas and Petroleum Products Distribution (Through Laying, Building, Operation and Expansion of Pipelines and Other Facilities) Order, 2026.

It seeks to:

• Process pipeline-related applications on priority.
• Ensure approvals within defined timelines.
• Reduce delays in CGD infrastructure development.
• Improve coordination among implementing authorities.

Uniform Right-of-Way Charges

• The 2026 Order provides for uniform charges for pipeline Right of Way.
• Right of Way refers to official permission to use land, roads or public spaces for laying, operating and maintaining pipelines.
• Uniform charges can reduce differences between jurisdictions and improve the predictability of project costs.

Reduction of VAT on Natural Gas

• States have been encouraged to reduce Value Added Tax on natural gas to 5%.
• Several States have already lowered VAT. Tax rationalisation can reduce the cost of piped gas and improve its affordability for consumers.

National PNG Drive 2.0

• The National PNG Drive 2.0 was conducted from January 1 to June 30, 2026.
• It aimed to accelerate domestic PNG connections across authorised Geographical Areas and increase public awareness about piped cooking gas.

Unified PNG Registration Portal

A unified digital platform is being developed to provide a single-window system for domestic PNG applications.

The proposed portal will allow consumers to:

• Apply for a new connection.
• Track the status of an application.
• Access information about service availability.
• Reduce the need to approach multiple offices.

Significance of the Scheme

Expansion of Clean Cooking Energy

The scheme can extend cleaner cooking fuel to more urban and semi-urban households, improving health, convenience and quality of life.

Improved Commercial Viability

Cheaper APM gas reduces the sourcing cost of CGD companies. This makes the expansion of household connections financially more attractive.

Activation of Existing Connections

By rewarding billed connections, the scheme encourages companies to convert installed but unused connections into active household services.

Development of Urban Infrastructure

Expansion of CGD networks strengthens the energy infrastructure of cities and growing towns.

Reduced Cylinder-Delivery Dependence

Piped supply can reduce the need for LPG cylinder transportation, storage and delivery in densely populated areas.

Energy Security

Greater use of domestically produced APM gas can reduce dependence on costlier imported LNG. However, long-term energy security will also depend on domestic gas availability and responsible demand management.

Ease of Living

Continuous supply, metered billing and digital registration can make household cooking-energy services more accessible and convenient.

Major Challenges

• High Initial Investment: Laying underground pipelines and providing last-mile household connections require substantial capital expenditure.
• Right-of-Way Delays: Pipeline construction often requires permission from urban local bodies, road authorities and other agencies.
• Inactive Connections: Some households may obtain a connection but continue using LPG due to familiarity, rental arrangements or uncertainty about consumption charges.
• Uneven Network Development: Authorisation of an area does not guarantee immediate pipeline access to every locality.
• Urban Construction Difficulties: Congested roads, underground utility lines and densely built settlements complicate pipeline installation.
• Tax Differences: Natural gas remains outside the Goods and Services Tax framework, and varying State VAT rates can affect consumer prices.
• Supply and Price Risks: Limited domestic gas availability may increase dependence on imported LNG, which is exposed to international price fluctuations.
• Safety and Maintenance: Pipeline integrity, accurate metering, emergency response and regular leak detection are necessary for consumer confidence.
• Regional Inclusion: Remote settlements and low-density areas may be less commercially attractive to CGD companies.

Way Forward

Ensure Last-Mile Connectivity

CGD companies should prioritise actual household connections and gas usage rather than limiting expansion to trunk pipelines.

Strengthen Centre–State Coordination

The Union Government, State governments and urban local bodies should coordinate to provide timely permissions and standardised Right-of-Way procedures.

Improve Consumer Awareness

Households should receive clear information about installation charges, billing, safety practices and the comparative cost of PNG.

Expand Digital Services

The unified registration portal should provide application tracking, billing support and grievance redressal in multiple Indian languages.

Maintain Safety Standards

Regular pipeline inspections, smart meters, leak-detection systems and emergency-response mechanisms should be made integral to network expansion.

Rationalise Taxes

Greater coordination among States on VAT rates can reduce regional price differences and improve consumer affordability.

Protect Vulnerable Consumers

Connection costs and security deposits should not prevent low-income households from accessing piped cooking gas. Suitable payment facilities may be considered.

Improve Environmental Performance

Methane leakage must be monitored across production, transportation and distribution networks. Expansion of natural gas should complement, rather than delay, the long-term transition towards renewable energy.

Conclusion

The Incentive Scheme for Promotion of Domestic PNG Connections shifts attention from network creation to active household usage. By providing lower-priced APM gas for incremental billed connections, it gives CGD entities a commercial reason to expand faster. Its success will depend on reliable gas availability, affordable tariffs, timely approvals and strict safety standards. Proper implementation can support cleaner cooking energy, urban infrastructure, energy security and improved ease of living.