The government will provide cheaper domestically produced gas to city gas distribution (CGD) companies in a bid to activate piped natural gas (PNG) connections where meters have been installed but remain unused. The scheme, which will come into effect from 1 September, was approved on Tuesday, according to the Ministry of Petroleum and Natural Gas. The move is aimed at expanding the use of PNG among households and reducing India’s dependence on largely imported liquefied petroleum gas (LPG).
At the end of March, around 1.69 crore households in India were connected to piped natural gas networks. However, only 1.07 crore, or about 63 per cent, were billed connections, according to data from the Petroleum and Natural Gas Regulatory Board (PNGRB). Industry executives attributed a large share of inactive connections to last-mile connectivity gaps.
Additional Domestic Gas Linked To New PNG Connections
Under the scheme, eligible CGD companies will receive an additional 200 standard cubic metres of lower-priced, domestically produced Administrative Price Mechanism (APM) gas for every incremental billed domestic PNG connection added above the threshold fixed for the respective geographical area. The programme will be implemented in two tranches over six months. The additional allocation of domestic gas will replace more expensive liquefied natural gas (LNG) currently procured by CGD companies for their compressed natural gas (CNG) transport segment, lowering their overall gas procurement costs.
The government expects these savings to improve the economics of expanding household PNG networks. According to the ministry, the lower sourcing costs could reduce the payback period on capital expenditure incurred for domestic PNG connections from around 10 years to about three years. The initiative is expected to incentivise CGD companies to address last-mile infrastructure gaps and convert installed but inactive PNG meters into operational connections.