No more worries about LPG cylinders! A new government scheme ensures gas is delivered directly to your doorstep..

The government has launched a new initiative to supply piped natural gas (PNG) to the maximum number of households across the country. The Ministry of Petroleum and Natural Gas has approved an incentive scheme to boost domestic PNG connections. This scheme will come into effect on September 1, 2026. Its objective is to initiate PNG supply in households where the connection infrastructure exists but billing or actual usage has not yet commenced. Additionally, emphasis will be placed on expanding the PNG network into new areas.

According to government data, there are currently approximately 1.74 crore domestic PNG connections in the country. The new scheme will assist gas distribution companies in increasing the number of active connections. The government expects this to provide financial benefits to companies for extending pipelines to new households, while offering families a clean, convenient, and reliable gas supply option for their kitchens. This move comes at a time when LPG supplies in the country have been impacted by issues related to the Strait of Hormuz.

**Extra Gas Allocation for Every New Active Connection**
Eligible City Gas Distribution (CGD) companies will benefit from this scheme. If a company adds new domestic PNG connections—resulting in actual billing—beyond its set target, it will receive an additional allocation of 200 Standard Cubic Meters (SCM) of domestically produced APM (Administered Price Mechanism) gas for each extra connection. It is worth noting that this natural gas is controlled by the government and is extracted from older fields.

APM gas is generally available at a lower price compared to other, more expensive gas sources. Consequently, receiving this additional gas could lower the companies' overall gas procurement costs. The government believes this will provide a financial incentive for companies to extend PNG connections to more households.

**Scheme to be Implemented in Two Phases**
This government incentive scheme will be implemented in two phases, with each phase lasting six months. The benefits will be available to companies that activate domestic PNG connections and commence billing beyond the targets set for their respective geographical areas. Companies will be able to use this additional APM gas instead of the expensive LNG they currently purchase for their CNG transport operations. This is expected to lower the overall gas sourcing cost, making it more profitable for companies to expand domestic PNG connections compared to the past.

**Cost of Connections**
According to the government, this scheme could help companies recover their investments in PNG networks and connections more quickly. Currently, it can take about 10 years to recoup the capital expenditure incurred on domestic PNG connections; with this incentive, that period is expected to drop to around 3 years.
A direct benefit could be that City Gas Distribution (CGD) companies accelerate the expansion of pipeline networks into new areas and activate connections that are currently unused. This would enable more households to start using piped gas.

**Government Focus on Making PNG Affordable**
The government is also urging states to reduce the VAT on natural gas to 5%. Lowering taxes could help reduce the price of PNG for households. The government aims to extend PNG access to more families, making it a convenient and affordable option for kitchen fuel.

**How ​​Much Cheaper Could PNG Become if VAT is Removed?**
If the 5% VAT on natural gas is completely removed in a state, the tax component of the PNG bill could be saved. For instance, if the price of PNG is ₹50 per SCM, a 5% VAT amounts to approximately ₹2.50 per SCM. With the removal of VAT, the price could drop to around ₹47.50 per SCM. However, the actual reduction in the bill would depend on the state's tax structure, gas procurement costs, and the charges levied by the local CGD company. In short, the removal of VAT could make PNG somewhat cheaper.

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