Centre's new scheme rewards gas firms for every active PNG connection

The Union government has approved an incentive scheme aimed at accelerating the rollout of piped natural gas (PNG) connections across the country. The scheme is designed to encourage city gas distribution (CGD) companies to convert existing but unused domestic connections into active ones, thereby expanding access to clean cooking fuel for more households.

According to the Ministry of Petroleum and Natural Gas, CGD companies have so far made provisions for more than 1.7 crore domestic PNG connections. However, the number of billed or active connections stands at just over 1.1 crore. This gap suggests that a significant number of households have access to the pipeline infrastructure but are not yet using it.

Under the new scheme, CGD companies will receive an additional allocation of 200 standard cubic metres of domestically produced natural gas, sold at the lower Administered Price Mechanism (APM) rate, for each unbilled connection that is converted into a working connection above a specified threshold level. The threshold is set to ensure that the incentive is linked to genuine expansion in active consumer base rather than routine operations.

The additional gas allocation is intended to replace the costlier liquefied natural gas (LNG) that CGD entities currently purchase for their compressed natural gas (CNG) segment. Since the APM gas is priced lower than imported LNG, the substitution will reduce the overall gas-sourcing costs for these companies.

The ministry said that the resulting cost savings are expected to shorten the payback period for capital expenditure incurred on domestic PNG connections from around 10 years to approximately 3 years. This improved financial viability is expected to give CGD entities a strong incentive to expand household PNG connectivity more rapidly.

The scheme aligns with the government's broader objective of increasing the share of natural gas in India's primary energy mix and promoting cleaner fuel options. PNG is considered a safer, more convenient, and environmentally friendly alternative to LPG cylinders and biomass fuels commonly used in many Indian kitchens.

Officials said the move is part of the government's continued push to extend piped gas coverage to more cities and towns, particularly under the City Gas Distribution (CGD) network expansion programme. The scheme is expected to benefit consumers by improving the availability and reliability of PNG supply, while also supporting the financial sustainability of gas distribution companies.

The government has not specified the total financial outlay for the scheme, as it is designed as a performance-linked incentive rather than a direct subsidy. The additional gas allocation will be made based on verified data of newly activated connections, and the mechanism for monitoring and implementation will be coordinated through the Petroleum Planning and Analysis Cell (PPAC).

Industry experts say the scheme could help bridge the gap between infrastructure creation and actual utilisation, a challenge that has persisted in the sector despite rapid network expansion. By making the business case for PNG connections stronger, the government aims to replicate the success seen in the transport segment, where CNG adoption has grown steadily over the past decade.

The announcement comes at a time when global energy prices remain volatile, and domestic production of natural gas is being prioritised to reduce import dependence. The government's move is likely to be watched closely by investors and stakeholders in the energy sector as a signal of its commitment to clean energy transition and ease of living for citizens.