India approves incentive scheme to expand domestic piped natural gas

The Indian government has approved a new incentive scheme to accelerate the expansion of domestic piped natural gas (PNG) connections. Scheduled to take effect on September 1, 2026, the initiative aims to make clean and affordable cooking fuel more accessible to households while reducing the nation's heavy reliance on imported liquefied petroleum gas (LPG).

Under the scheme, City Gas Distribution (CGD) companies will receive incentives for every incremental billed domestic PNG connection achieved above a fixed threshold in their respective areas. Specifically, eligible entities will be allocated an additional 200 SCM of domestically produced, lower-priced APM gas for every new active, billed connection. This additional allocation is intended to help companies offset the costs of more expensive liquefied natural gas (LNG) used in their transport segments, thereby lowering overall sourcing costs.

The government expects these measures to significantly reduce the payback period for capital expenditures on PNG infrastructure from approximately 10 years to roughly three years. By promoting PNG, which is supplied via underground pipelines, the government seeks to mitigate the economic impact of international fuel supply disruptions and geopolitical tensions, particularly in the Middle East, which currently influence India's substantial LPG import costs.