The Petroleum Ministry has launched a comprehensive administrative support initiative to accelerate the shift from LPG to piped natural gas (PNG) across the country. Petroleum Secretary Neeraj Mittal has directed states and Union Territories to appoint district-level nodal officers to coordinate with gas distributors and oil marketing companies. In an August 21 letter to state chief secretaries, Mittal emphasized that PNG, as a safer, cleaner and more efficient cooking fuel, plays a critical role in advancing India's energy transition while reducing logistics burden associated with LPG distribution. The ministry is seeking district-level intervention as it moves to implement a regulatory framework aimed at preventing households from retaining both LPG and PNG connections in areas where piped gas is available. According to Business Standard, the ministry has asked chief secretaries to direct their respective food and civil supplies departments to nominate one nodal officer at the district level, not below the rank of district supply officer, to be formally associated with the local PNG Coordination Committee.
The government has implemented stringent regulatory measures to ensure effective PNG adoption. The ministry has notified the Natural Gas and Petroleum Products Distribution (Through Laying, Building, Operation and Expansion of Pipelines and Other Facilities) Orders of 2026 and LPG Control Orders under Section 3 of the Essential Commodities Act, 1955. As per Business Standard, these orders prohibit households from retaining simultaneous LPG and PNG connections and provide for discontinuation of LPG supply to households that fail to apply for a PNG connection despite due notice, wherever PNG supply is available. The ministry has directed authorised city gas distribution (CGD) entities and public-sector oil marketing companies (OMCs) to establish a PNG Coordination Committee (PCC) in every geographical area. The committees will identify eligible housing societies and households, issue statutory notices to housing societies, resident welfare associations and individual consumers, and conduct outreach camps to accelerate PNG connections. The PCC mechanism is already operational but its experience shows that district-level administrative support is crucial for implementing the transition within prescribed timelines.
City gas distribution (CGD) stocks rallied strongly on Wednesday, with shares jumping by up to 6% following the Centre's approval of an incentive scheme to accelerate domestic piped natural gas (PNG) connections. Mahanagar Gas (MGL) shares jumped nearly 6% to trade at ₹1,173 apiece, while Indraprastha Gas (IGL) and Adani Total Gas jumped over 5% each during the trading session. As per The Times of India, the positive market reaction came following the government's introduction of additional incentives for city gas distributors to expand household piped-gas networks. Investor sentiment was also dampened by mixed signals from Tehran and Washington regarding the Strait of Hormuz, highlighting the sector-specific strength of the CGD rally.
Under the APM/NAPM Incentive Scheme for the Promotion of Domestic PNG Connections, eligible city gas distribution (CGD) companies will receive an additional allocation of 200 standard cubic metres (SCM) of lower-priced, domestically produced APM gas for every incremental billed domestic PNG connection above the threshold set for their respective geographical areas. As reported by The Times of India, APM (Administered Price Mechanism) gas is domestically produced natural gas whose price is set by the government, making it significantly cheaper than imported liquefied natural gas (LNG). The additional gas allocation will substitute the costlier Liquefied Natural Gas (LNG) that CGD entities currently procure for their Compressed Natural Gas (Transport) segment, thereby lowering their overall gas-sourcing costs and improving profitability for distribution companies. The extra allocation of lower-priced domestically produced APM gas will also give eligible city gas distribution companies some flexibility in their sourcing, as reported by The Times of India. Since average household consumption is significantly below 200 scm, the additional allocation would allow CGDs to replace some of the more expensive non-APM gas they currently procure from other sources. According to Nomura, the incentive could significantly improve the economics of PNG expansion, with the additional APM allocation potentially bringing down the payback period for PNG-related capital expenditure from around 10 years to three years.
According to Nomura analysis, MGL is positioned to benefit most significantly from the new incentive scheme due to its low customer addition base during April-June 2026. MGL added only 9,700 new households per month during April-June 2026, compared with its historical run-rate of 28,000-30,000 new households per month, as reported by Nomura. The brokerage noted that "this implies that MGL has an advantage of a very low base and it can potentially get much higher APM allocation at the expense of other CGDs (given APM gas pool may not change)". MGL also has the lowest gas consumption per household among the covered CGDs at 108 scm per annum, implying "the highest excess APM allocation per new household added" and the potential for the highest surplus APM gas allocation. In contrast, IGL added 28,800 households per month during April-June 2026, in line with its usual run-rate, while Gujarat Energy (GEL) has the highest per-household gas consumption at 131 scm per annum, implying the lowest excess APM allocation per new household added. The implied benefit is ₹110 crore for Mahanagar Gas (MGL) and ₹20 crore for Indraprastha Gas (IGL), assuming market gas cost of $12 per million British thermal units versus $7/mmbtu for APM gas. Nomura Global Markets Research estimates that, based on FY26 consumption, MGL, IGL and GEL could have annual surpluses of 92 scm, 83 scm and 69 scm, respectively. Emkay Global Financial Services estimates that MGL and IGL could save ₹110 crore and ₹20 crore, respectively, which would amount to about 11% and 1.1% of their FY26 pre-tax profits, respectively, though savings could come down if the CGDs pass on a part of the incentive to new customers for quicker onboarding.
At present, there are 1.74 crore domestic PNG connections across the country, according to the government, as reported by The Times of India. However, actual consumers are significantly lower, at 1.1 crore, notes Emkay. According to PNGRB data as of March 2026, out of 16.9 million connected households, only 10.7 million, or 63%, were billed customers, as reported by Nomura. The new scheme directly incentivises city gas distribution (CGD) companies to actively convert unbilled connections into working gas connections, and expand the PNG network to new areas. The government highlighted that PNG offers households a safer, cleaner and more convenient alternative to LPG cylinders and traditional cooking fuels, stating that "This Scheme builds on a series of steps the Government has taken over the past few months to accelerate PNG expansion and make the transition to clean cooking fuel easier for households." The push to expand PNG gained momentum during the West Asia crisis earlier this year, when disruptions to LPG supplies prompted the government to seek ways to reduce dependence on cylinders, particularly in the commercial sector. Government data show that more than 5 lakh PNG connections have been gasified since March, while over 5.7 lakh consumers have registered for new connections, according to The Times of India. The key metric to track after September 1 will be active and billed PNG customers, not just new connections, as per Nomura.
The resulting savings are expected to reduce the payback period on capital expenditure for domestic PNG connections from around 10 years to approximately 3 years, providing CGD companies with a stronger financial incentive to accelerate household PNG connections. According to The Times of India, the government stated that "this will give CGD entities a strong financial incentive to expand household PNG connectivity more rapidly," as reported by The Times of India. However, because the scheme provides only a one-time benefit, CGDs are likely to focus on increasing adoption within their existing connected areas rather than building infrastructure and expanding their coverage. The additional allocation of lower-cost APM gas is expected to enable CGD companies to substitute a larger portion of the expensive liquefied natural gas (LNG) used in their compressed natural gas (CNG) transportation business, thereby lowering their overall gas sourcing costs and substantially improving the financial viability of expanding household PNG networks. A Nuvama Research report dated 18 August cautions that CGD multiples could de-rate amid uncertainty over ad-hoc government policies and persistent margin headwinds.
