The economics behind PNG

In today’s episode on 14th April 2026, we tell you why India is pushing consumers to switch to PNG (Piped Natural gas) and what it will take to achieve this ambitious target. Book a FREE call with Ditto https://ditto.sh/vx51ji

• 0:00Speaker 00

  Hello folks, you're tuned in of an charts daily. In today's episode, we tell you why India is pushing consumers to switch to piped natural gas, that is PNG, and what it will take to achieve this ambitious target.

• 0:14Speaker 00

  Before we begin, here's a quick word from team Dito. Life has a way of surprising us and not always in a good way. Sometimes it's a sudden illness or an unexpected hospital visit that can shake up everything. In India, families still pay about 39% of medical expenses directly from their own pockets and just one hospital's take can wipe out years of savings. The easiest way to protect yourself is by getting a good health insurance plan. It's way cheaper than footing one huge bill. And if you're unaware where to start, book a free call with Dito. No spam, just honest jargon-free guidance, trusted by over 8 lakh people for their health and term insurance needs. The link is in the description. Now, back to the story.

• 0:56Speaker 00

  About 50 lakh people in India book LPG cylinders on any given day. That's when everything is running smoothly, but things aren't normal right now. With the war in the Middle East, the Strait of Hormuz, a critical route in the Middle East that carries LPG into your cylinder, has been disrupted. Liquification facilities in the Gulf are either damaged or suspended. So, even if ships pass, there's less gas being processed for export. This means that the daily gas bookings have jumped to nearly 90 lakh. That's panic booking or essentially people rushing to secure a refill, sometimes even before their current cylinder runs out. And that's exactly why this crisis has brought fresh attention to piped natural gas connections, which the government wants you to switch to wherever the facility is available. PNG simplifies things.

• 1:40Speaker 00

  Gas flows directly into homes through pipelines without you having to worry about when your cylinder will run out, so there's no need for last-minute bookings or panic. Besides, it also eases pressure on the system. Distributors don't have to refill cylinders, load them onto vans and navigate busy streets for deliveries. Fewer trips means less fuel use, lower congestion and cleaner air. And most importantly, there's the supply angle. India imports roughly 60% of its LPG demand. In FI25 alone, imports stood at about 20.67 million tonnes.

• 2:10Speaker 00

  or nearly sixty-six percent of domestic consumption. And close to ninety percent of this comes through the state of Hormuz. PNG, on the other hand, is mainly methane. Around forty to fifty percent comes from domestic fields like the Krishna Godavari basin, Assam and Gujarat, while the remaining fifty to sixty percent is imported LNG, that's liquefied natural gas, which is regasified and supplied via pipelines. In short, PNG simply means less import dependence and fewer bottlenecks. But if PNG is so great, then why did it take so long to scale up in India, you ask? After all, it's not like PNG is new. Household connections started picking up after the city gas distribution framework, that is CGD framework, emerged in the late nineteen nineties and early two thousands, allowing authorized companies to supply cooking gas to homes through pipelines.

• 2:53Speaker 00

  That's over twenty-five years ago and yet, only about one point six crore households or roughly twelve to thirteen percent are connected to PNG today. So what's holding it back? Well, it mostly comes down to three things. First, the basics. To build a PNG network, companies first have to lay pipelines. Big trunk pipelines or massive eighteen to thirty-six inch steel pipes run hundreds of kilometers from gas fields or LNG terminals to cities. From there, smaller steel or polyethylene pipes, that is PE pipes, branch out within towns to reach homes. But laying these pipelines isn't simple. They often have to pass under busy streets, homes, shops or even water bodies, and that requires something called right of way. Essentially, permissions to dig and lay infrastructure.

• 3:39Speaker 00

  For city-level networks, that means approvals from municipalities, railways, highway authorities, power utilities and more. There's also objections that can come from private or commercial property owners. If a property owner objects to digging, the entire pipeline route can get disrupted. But even if all permissions were granted, things don't move smoothly. Rollouts have lagged license awards because approvals come from multiple layers, such as central, state and local bodies, each with different timelines and fees. And enforcement hasn't been strong either, even though the Petroleum and Natural Gas Regulatory Board, a statutory body that regulates consumption and distribution in the petroleum and natural gas sectors, has already awarded

• 4:20Speaker 00

  Most areas to CGD players. You can see it in the numbers. PNG network growth has slowed over the years from ten point six percent in FI twenty three to five percent in FI twenty four. And further down to just two point two percent in FI twenty five. The second issue is taxes. Actually, on paper, PNG should be cheaper than unsubsidized LPG because it cuts out cylinders, bottling plants and a large part of the logistics chain. But that's not always the case in reality because PNG is taxed under VAT, that's value added tax, predecessor to the current GST regime. And VAT rates vary by state, typically between five and over fourteen percent. LPG cylinders, on the other hand, are taxed at concessional five percent GST across India.

• 5:04Speaker 00

  So depending on where you live, PNG can end up costing more and especially since it's often coupled with additional excise duties. There are also upfront costs, that is, even when pipelines reach a town, many households delay connections because they have to pay meter or connection charges anywhere between five K to nine thousand rupees. Add to that the habit of using cylinders and occasional loyalty to LPG schemes, especially since subsidies are still available and many people simply stick to familiar cooking fuels. And finally, there's the written on investment problem for CGD companies. You see, the economics of PNG simply doesn't work so well in smaller towns because in low density or semi-rural areas, companies have to lay long stretches of pipelines to reach a small number of homes.

• 5:46Speaker 00

  That pushes up infrastructure and supply cost per household, but the revenue side doesn't keep up. Fewer homes means fewer paying customers and even those households often use less gas. Maybe cooking less frequently using high demand appliances or even relying partly on subsidized LPG firewood or karasim. Now that leads to weak project level returns. So naturally, CGD companies delay expanding into these areas. This simply means that even if many consumers are willing to switch to PNG, the business case just isn't strong enough. And that shows up in data. Nearly sixty lakh households or about forty percent of total PNG connections are inactive because customers have meters installed but don't have any gas flowing into their homes. And yet, despite all these problems, the government now has a real shot at pushing PNG harder.

• 6:30Speaker 00

  In fact, it's gone all guns blazing using the Middle East crisis and the domestic LPG supply crunch as the perfect moment to accelerate PNG adoption. Take the new policy move, for instance. In March, it notified the Natural Gas and Petroleum Products Distribution Order 2026 under the Essential Commodities Act of 1955. This order effectively takes away the power of housing societies, resident welfare associations, municipal bodies and local authorities to block or delay pipeline work. They can't impose arbitrary charges either. So, a lot of the usual roadblocks have been overridden in favor of national interest. The government has also asked CGD firms to provide PNG connections to places where mass cooking happens, such as residential schools, colleges, hospitals, canteens, restaurants,

• 7:14Speaker 00

  community kitchens or wherever mass cooking happens within five days if pipeline infrastructure already exists in that area. Even taxes are getting attention. Though PNGRB is pushing states to rationalize VAT on PNG and CNG, some have already cut rates closer to 5% to make PNG more affordable and reduce price difference across regions. If these measures actually stay on track, PNG adoption could finally pick up the way the government hopes it will. Apart from this, more states might need to adopt faster, single-window approaches for PNG clearances. There are already a few good examples to learn from. Take Assam's city gas distribution policy. It mandates that key infrastructure clearances be issued within 30 days and also empowers CGD entities to build and operate networks in their allotted areas. Karnataka offers another example.

• 7:58Speaker 00

  Its 2023 policy set up a dedicated desk within the Infrastructure Development Department and created an APICS committee to fast-track approvals, along with monthly district-level reviews to keep things moving. If more states allow similar playbooks, the rollout of PNG networks could become far smoother. But, here's the thing. The target is pretty ambitious. The plan is to push over 12 crore PNG connections by 2034. That's roughly eight to nine times where we are today, all within the next eight years. So, it's quite a massive scale-up. So, yes, while the intent is clear, execution will be everything. And that's what will ultimately decide how mission PNG plays out from here. All right, folks, I will see you in the next one. Thank you for listening to today's episode.

• 8:43Speaker 00

  And if you want to share your feedback or suggestions, do drop us an email to [email protected]. Until next time.