The government has introduced a new scheme aimed at providing incentives to city gas distributors in order to increase the uptake of piped natural gas (PNG) among households. This initiative comes in response to the escalating costs associated with fuel imports, exacerbated by the ongoing conflict between the US and Iran, which has disrupted fuel supplies. The government’s objective includes encouraging households to transition from liquefied petroleum gas (LPG) cylinders to a more stable and potentially cost-effective option of piped gas.

The incentive programme is set to launch in September and will allow city gas distribution firms to receive an additional allocation of 200 standard cubic metres of affordable domestic gas for each household that is connected and actively using PNG services. This allocation is anticipated to reduce the overall expenses related to gas procurement for these companies.

Moreover, the initiative is designed to motivate distributors to convert inactive PNG connections into active ones and expand their service networks to new households. It is estimated that this scheme can enable companies to recoup their investments in new customer connections within approximately three years, a significant reduction from the current timeframe of around ten years.

Current State of LPG Imports and Its Challenges

India stands as the world’s second-largest importer of LPG, relying on international sources for nearly 60 per cent of its total consumption. The majority of domestic LPG supplies are procured from the Middle East, making the country vulnerable to fluctuations in global markets and geopolitical tensions, such as the recent disruptions due to the US-Iran conflict. In 2025, India imported approximately 22 million metric tonnes of LPG at a cost approaching $12 billion, predominantly sourced from the Middle East.

The government aims to leverage the current challenges in fuel supply to accelerate the development of piped gas connections across the country. Currently, India has around 17.4 million domestic PNG connections, whereas there are about 331.4 million active household LPG consumers as of July 1. This discrepancy highlights a significant opportunity for city gas distributors to broaden their customer base.

Piped natural gas offers a more convenient solution for cooking needs, as it eliminates the necessity for households to order and frequently replace LPG cylinders. This shift could result in both economic savings for consumers and reduced pressure on imported fuels.

Incentives Offered by Gas Companies

In light of the current geopolitical situation and the government’s new initiatives, city gas distributors have begun to implement their own incentives to attract more PNG customers. Major companies such as Indraprastha Gas, Mahanagar Gas, GAIL Gas, and Bharat Petroleum have introduced various promotional strategies, including reduced installation fees for new piped gas connections.

The upcoming incentive scheme from the government is expected to provide these distributors with additional motivation to extend their networks and convert previously inactive connections into paying customers. This initiative is not only aimed at expanding access to piped gas but also at stabilising the gas supply landscape amidst ongoing international challenges.

Ultimately, the government’s proactive measures in promoting piped natural gas solutions could reshape the energy consumption patterns in India, aligning with both economic and environmental goals.

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