India Unveils Incentive Scheme to Boost Domestic PNG Connections

The Indian government has approved an incentive scheme to promote domestic Piped Natural Gas (PNG) connections, effective September 1. The scheme is aimed at increasing PNG adoption and conversion of unbilled connections into working gas connections.

According to the Ministry of Petroleum and Natural Gas, there are currently 1.74 crore domestic PNG connections in the country. Under the scheme, eligible City Gas Distribution (CGD) entities will receive an additional 200 SCM of domestically-produced APM gas for every incremental billed domestic PNG connection achieved during the performance period.

The extra allocation is intended to substitute the costlier Liquefied Natural Gas (LNG) that CGD entities currently buy for their Compressed Natural Gas segment. This move is expected to lower their overall gas-sourcing costs and reduce the payback period on capital expenditure for domestic PNG connections from around 10 years to approximately three years.

The ministry has also listed a set of regulatory and tax measures preceding the scheme, including the issuance of an Accelerated Approval Framework and standardised Right-of-Way charges under the Natural Gas & Petroleum Distribution Order, 2026. States are being encouraged to reduce VAT on natural gas to 5 percent.