Explained: How the new PNG incentive scheme will bring piped gas to more homes

No more runs for cylinders! The central government has approved the Incentive Scheme for Promotion of Domestic PNG Connections, an initiative to accelerate the availability of clean, safe, and affordable piped natural gas (PNG) for households across the country. Effective September 1, 2026, the scheme will incentivise City Gas Distribution (CGD) companies to convert inactive or unbilled domestic PNG connections into active, billed connections, and expand PNG networks into new areas.  

What does the scheme mean for ordinary households? 

India currently has around 1.74 crore domestic PNG connections. However, not all these connections are active and receiving gas. Under the new scheme, CGD companies will have a stronger financial incentive to make existing connections operational and bring PNG to more households and neighbourhoods. 

This means that more families could gain access to a cooking fuel that is supplied directly to their homes through a pipeline, without the need to order, store or replace LPG cylinders. 

Is PNG beneficial for households? 

Safer cooking fuel: PNG is supplied through pipelines at low pressure, so households do not need to store LPG cylinders at home. Since natural gas is lighter than air, it disperses relatively quickly in the event of a leak. 

Greater convenience: There is no need to book, lift, store or replace cylinders. PNG is supplied directly to the kitchen, with households paying according to their actual metered consumption, much like electricity or piped water. 

Potentially lower fuel costs: Households pay only for the gas they consume. PNG can also be cheaper than LPG on a per-unit energy basis, helping reduce cooking-fuel expenditure over time. 

Cleaner cooking: PNG is a cleaner-burning fuel than many conventional cooking fuels. Its wider use can help reduce household air pollution and emissions associated with cooking. 

Uninterrupted supply: As PNG reaches homes through a pipeline network, households are not dependent on cylinder delivery schedules. This can be particularly convenient for residents of high-rise buildings and densely populated urban areas. 

What is the government doing to expand PNG access? 

The new incentive scheme is part of a broader effort to make domestic PNG connections easier and faster. 

Streamlining regulatory approvals: An Accelerated Approval Framework and standardised Right-of-Way charges have been issued under the Natural Gas & Petroleum Distribution Order, 2026. These measures are intended to speed up the processing of applications for PNG infrastructure and provide greater consistency in Right-of-Way charges. 

Making PNG more affordable: States are being encouraged to reduce VAT on natural gas to 5%. Several States have already taken steps to lower VAT, which can help make PNG more affordable for consumers. 

National PNG Drive 2.0: The nationwide National PNG Drive 2.0 includes measures such as a portal for surrendering LPG cylinders, household notices, awareness camps and efforts to facilitate the conversion of LPG-using housing societies to PNG. 

A unified PNG registration portal: A single-window digital platform is being developed to simplify the process of applying for, and tracking, new PNG connections. 

How does the incentive scheme work? 

The scheme provides a financial incentive to eligible CGD entities based on the number of additional billed domestic PNG connections they achieve. 

For every incremental billed domestic PNG connection above the Threshold Level set for its respective Geographical Area (GA), an eligible CGD entity will receive an additional allocation of 200 SCM (standard cubic metres) of domestically produced, lower-priced APM gas during the performance period. 

The Scheme will be implemented in two tranches over six months. The additional allocation of lower-priced domestic gas will allow CGD entities to substitute some of the more expensive Liquefied Natural Gas (LNG) they currently procure for their Compressed Natural Gas (Transport) segment. This is expected to reduce their overall cost of sourcing gas. 

Why does this encourage faster PNG expansion? 

Setting up a domestic PNG connection requires significant upfront investment by CGD companies. At present, the payback period for this investment can be around 10 years. 

The cost savings generated through the Scheme are expected to reduce this payback period to approximately 3 years. In simple terms, the Scheme makes it financially more attractive for CGD companies to invest in new domestic PNG connections and activate existing ones. 

What is the larger goal? 

The incentive Scheme is designed to create a stronger link between PNG expansion and financial viability for CGD companies. By reducing the cost burden associated with domestic PNG connections, the Scheme is expected to encourage faster network expansion and quicker activation of existing connections. 

For households, the intended outcome is straightforward: more homes with access to clean, safe, convenient, and affordable piped cooking gas. With regulatory reforms, VAT rationalisation, National PNG Drive 2.0, and the proposed unified PNG registration portal, the scheme represents another step towards expanding household access to PNG across India.