PNG Government to Provide Distributors with Additional Affordable Domestic Natural Gas for New Connections
Looking to accelerate the adoption of piped natural gas (PNG), the Indian government has launched a new incentive scheme for city gas distributors. Effective from September 1, the program offers 200 standard cubic metres (SCM) of cheaper domestic natural gas for each new billed domestic PNG connection. This initiative aims to facilitate the transition from LPG cylinders to PNG for cooking, with approximately 17.4 million domestic PNG connections currently in place across the country.
New PNG Incentive Scheme
The government-approved scheme applies to new domestic PNG connections that exceed a specified threshold in each geographical area. According to the oil ministry, the initiative is designed to activate existing but unused connections and expand PNG networks to unserved areas. The allocation of lower-priced domestically produced APM (administered price mechanism) gas will provide city gas distribution companies with more flexibility in sourcing. This allows them to substitute some of the more expensive Liquefied Natural Gas (LNG) used in Compressed Natural Gas (CNG) transport operations, thereby lowering overall gas procurement costs.
The government anticipates that these savings will enhance the financial viability of household PNG connections. It estimates that the payback period for distributors’ capital expenditure could decrease from about 10 years to roughly three years, creating a stronger commercial incentive for expanding household connections. The incentive rollout will occur in two phases, each lasting six months.
Why the Need for PNG Push
This measure is part of the government’s broader strategy to increase household access to PNG, which is viewed as a cleaner and more convenient cooking option compared to LPG cylinders and traditional fuels. The push for PNG gained momentum during the recent Middle East conflict, which disrupted LPG supplies and prompted the government to seek alternatives, particularly for commercial users. While household LPG supplies were prioritized, city gas distributors were urged to expedite PNG connections, with incentives offered to both consumers and businesses to encourage the switch.
Since March, government data indicates that over 500,000 PNG connections have been established, with more than 570,000 consumers registering for new connections. The government has also directed existing PNG users to surrender their domestic LPG connections and initiated a campaign to promote the transition to piped gas. Efforts are underway to ease regulatory constraints impacting gas infrastructure, standardize right-of-way charges, and persuade states to lower VAT on natural gas to 5%. Several states have already implemented tax reductions.
As part of the nationwide PNG Drive 2.0, the government is conducting awareness programs to encourage housing societies currently using LPG to switch to PNG. Additionally, a common digital platform is being developed to allow consumers to apply for and track PNG connections. The new incentive aims to improve the economics of household PNG expansion for city gas distribution companies while facilitating the transition for consumers from LPG cylinders to piped cooking gas.
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