Government Approves Incentive Scheme for Domestic PNG Connections
The Ministry of Petroleum & Natural Gas has approved the Incentive Scheme for Promotion of Domestic PNG Connections, effective from September 1, 2026. This initiative aims to accelerate the expansion of active piped natural gas connections to households across India, building on the existing base of 1.74 crore domestic PNG connections.
Scheme Structure and Incentives
Under the scheme, eligible City Gas Distribution (CGD) entities will receive an additional allocation of 200 standard cubic meters (SCM) of domestically-produced, lower-priced APM gas for every incremental billed domestic PNG connection achieved during the performance period, beyond the Threshold Level determined for each Geographical Area. The scheme will be implemented over two tranches spanning six months. This additional gas allocation will substitute the costlier Liquefied Natural Gas that CGD entities currently procure for their Compressed Natural Gas (Transport) segment, thereby reducing their overall gas-sourcing costs.
The government expects these cost savings to significantly shorten the payback period for capital expenditure on domestic PNG connections from approximately 10 years to around 3 years, providing CGD companies with strong financial incentives to expand household PNG connectivity more rapidly.
Broader Government Initiatives
This scheme is part of a comprehensive government push for PNG expansion that includes several supporting measures: streamlined regulatory clearances through the Accelerated Approval Framework and standardized Right-of-Way charges under the Natural Gas & Petroleum Distribution Order, 2026; VAT rationalization encouraging states to reduce VAT on natural gas to 5%; the National PNG Drive 2.0 including a portal for LPG cylinder surrender and conversion of LPG-using housing societies; and development of a unified PNG registration portal to simplify application and tracking processes.
Benefits of PNG Adoption
The scheme promotes PNG as a safer, cleaner, and more convenient alternative to LPG cylinders, offering benefits including elimination of cylinder storage and handling risks, round-the-clock availability with metered consumption billing, generally lower per-unit energy costs compared to LPG, reduced pollutant emissions, and uninterrupted supply independent of delivery logistics.