Government Approves 6-Month Incentive Scheme to Increase Domestic PNG Connections

The Ministry of Petroleum and Natural Gas has approved an incentive scheme for domestic piped natural gas (PNG) connections, as per news reports. The scheme was approved on August 18, 2026, and will take effect from September 1, 2026. 

There are currently 1.74 crore domestic PNG connections in the country. The government said the scheme is aimed at increasing active connections, including by converting existing unbilled connections into billed ones. 

Incentive Tied to New Connections 

Under the scheme, eligible City Gas Distribution (CGD) companies will receive additional domestically produced gas for adding billed domestic PNG connections. 

For every incremental billed domestic PNG connection above the threshold set for a geographical area, a CGD entity will receive 200 Standard Cubic Metres (SCM) of lower-priced APM gas during the performance period. 

The scheme also covers the expansion of PNG networks into areas where connections are not currently available. Companies can therefore increase their eligible gas allocation by adding more billed household connections. 

Two Tranches Over Six Months 

The scheme will be implemented in two tranches over six months. The additional gas allocation will replace some of the Liquefied Natural Gas (LNG) that CGD companies currently buy for their Compressed Natural Gas (Transport) segment. 

The government said this would reduce the overall gas-sourcing cost for CGD entities. The lower cost is also expected to change the payback period for capital expenditure on domestic PNG connections. 

The Ministry said the payback period could fall from around 10 years to approximately three years. 

VAT on Natural Gas 

The government has also asked states to bring VAT on natural gas down to 5%. The proposed reduction would affect the tax component of natural gas supplied to consumers. 

The announcement comes when LPG supplies have been affected by the blockade of the Strait of Hormuz since the start of the US-Iran conflict. PNG is used by households as an alternative cooking fuel to LPG cylinders and traditional fuels. 

Read More: MMTC-PAMP Eyes to Expand into Consumer Gold Recycling! 

Conclusion 

The incentive scheme will be implemented in two tranches over six months. CGD companies will receive additional APM gas against incremental billed PNG connections. The measure also covers the conversion of existing unbilled connections. 

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