The Centre has introduced a new incentive scheme to accelerate the expansion of domestic Piped Natural Gas (PNG) connections, offering City Gas Distribution (CGD) entities additional access to lower-priced domestic gas for every incremental household connection.
The Incentive Scheme for Promotion of Domestic PNG Connections was launched on August 18, 2026, and came into effect on September 1. The scheme is aimed at increasing the number of active and billed domestic PNG connections while encouraging CGD companies to expand their networks into new areas.
According to the Petroleum and Natural Gas Regulatory Board (PNGRB), authorised entities are currently developing City Gas Distribution networks across 309 geographical areas covering the mainland of the country. As of August 18, India had 1.74 crore domestic PNG connections.
Under the new scheme, a minimum connection threshold has been fixed for each geographical area. CGD entities that add billed domestic connections beyond the prescribed threshold during the performance period will receive an additional allocation of 200 Standard Cubic Metres (SCM) of domestically produced Administered Price Mechanism (APM) gas for every incremental connection.
The government said the cheaper APM gas would partly replace costlier Liquefied Natural Gas (LNG) currently sourced by CGD entities for their Compressed Natural Gas (CNG) transport operations. The resulting reduction in gas procurement costs is expected to improve the economics of domestic PNG expansion.
The scheme is expected to reduce the payback period on capital invested in a domestic PNG connection from around 10 years to nearly three years, creating a stronger commercial incentive for companies to connect more households.
The scheme will be implemented in two tranches over six months.
PNG expansion is also being supported through regulatory and infrastructure measures. An Accelerated Approval Framework under the Natural Gas and Petroleum Products Distribution Order, 2026, provides for faster approvals and uniform Right-of-Way charges for laying pipelines.
The Centre has also encouraged states to reduce VAT on natural gas to 5 per cent, with several states having already adopted the lower rate.
A nationwide National PNG Drive 2.0 was conducted from January 1 to June 30, 2026, to accelerate domestic connections, while a unified digital portal for applying for and tracking PNG connections is also being developed.
The government said PNG provides households with continuous metered supply without the need to store or replace LPG cylinders and produces fewer pollutants than conventional cooking fuels.
