Government Offers Incentives to Boost PNG Connections and Cut LPG Dependence

The government is introducing a new incentive scheme to encourage city gas distributors to expand piped natural gas (PNG) connections among households.

The initiative, which will come into effect in September, is aimed at encouraging more families to shift from LPG cylinders to piped gas. It comes as disruptions to fuel supplies in the Middle East have raised concerns over India's dependence on imported LPG and increased import costs.

Under the new scheme, city gas distribution companies will receive an additional 200 standard cubic metres of cheaper domestic gas for every household that is newly connected and begins using and paying for PNG.

The government expects the additional allocation to reduce the cost of gas procurement for distributors and improve the economics of expanding PNG networks.

New incentive to speed up PNG expansion

The incentive is designed to encourage companies to connect more households as well as activate existing PNG connections that are currently not being used.

According to the Ministry of Petroleum and Natural Gas, the scheme could help distributors recover their investment in new PNG connections in around three years. Under the existing economics, the recovery period can be around 10 years.

The shorter recovery period is expected to make expansion into new residential areas more attractive for city gas distributors.

The government is also looking to make greater use of existing infrastructure by encouraging companies to convert inactive connections into active, paying customers.

India remains heavily dependent on imported LPG

The push for PNG comes as India faces concerns over its dependence on imported LPG.

India is the world's second-largest LPG importer and relies on overseas supplies for around 60% of its LPG requirements.

A significant share of India's LPG imports comes from the Middle East, where ongoing conflict has disrupted fuel shipments and raised concerns over supply availability and prices.

India imported around 22 million metric tonnes of LPG in 2025, spending nearly $12 billion. Most of those imports came from Middle Eastern suppliers.

The government is therefore looking to accelerate the expansion of domestic piped gas infrastructure as part of efforts to reduce pressure on imported LPG supplies.

Huge gap between PNG and LPG users

India currently has around 17.4 million domestic PNG connections.

This is significantly lower than the country's approximately 331.4 million active household LPG customers as of July 1.

The large gap indicates substantial potential for city gas distribution companies to expand PNG coverage among households.

Unlike LPG cylinders, PNG is delivered directly to homes through pipelines, eliminating the need to order, transport and replace cylinders.

Gas companies already offering incentives

City gas distributors have already introduced measures to attract new PNG customers amid concerns over fuel supplies.

Companies including Indraprastha Gas, Mahanagar Gas, GAIL Gas and Bharat Petroleum have offered benefits such as reduced installation charges for new PNG connections.

The government's new incentive is expected to strengthen these efforts by improving the financial viability of network expansion.

By making new connections more commercially attractive, the scheme could encourage distributors to expand into more residential areas and reactivate unused connections.

The broader objective is to increase household PNG adoption while reducing India's dependence on imported LPG and improving the resilience of domestic cooking-fuel supplies.