Govt Revamps Gas Allocation Policy to Boost CNG & PNG Supply

The Government of India has introduced key revisions to the Domestic Gas Allocation Policy, aimed at improving the reliability and affordability of natural gas supply to the Compressed Natural Gas (CNG) and Piped Natural Gas (PNG) segments.  

These steps are aligned with India’s broader goals of promoting clean energy usage, enhancing air quality, and strengthening domestic energy security. 

Advance Quarterly Allocation to Improve Visibility 

From the first quarter of FY 2025-26, domestic natural gas allocations for CNG used in transportation (CNG-T) and PNG used in domestic cooking (PNG-D) will now be carried out on a two-quarter advance basis. This move allows City Gas Distribution (CGD) entities to plan ahead with improved visibility into supply volumes. 

Moreover, the updated policy now includes New Well Gas (NWG) sourced from nomination fields of ONGC and OIL, strengthening supply availability. These projections will be based on inputs from GAIL and ONGC, ensuring better planning and efficiency in deliveries to end-users. 

Shift to Pro-Rata Allocation of New Well Gas 

One of the most significant changes is the replacement of the auction-based method for NWG allocation with a quarterly pro-rata model. Under this mechanism, GAIL will allocate gas to CGD entities based on their proportional requirements. This approach is designed to ensure a timely and reliable supply of natural gas in line with prevailing guidelines from the Ministry of Petroleum and Natural Gas (MoPNG). 

Stable Allocation Ratios Despite Rising Demand 

Despite increasing demand, the Government has maintained stable allocation ratios for the CGD sector: 

• Q3 FY 2024–25: 54.68% of projected demand allocated 

• Q1 FY 2025–26: 55.68% 

• Q2 FY 2025–26 (Projected): 54.74% 

This consistency reinforces the Government’s commitment to prioritising public-facing gas segments, especially for domestic cooking and public transport. 

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Pricing Linked to Indian Crude Basket 

Both APM gas and NWG prices will continue to be linked to the Indian Crude Basket, calculated on a monthly basis. With recent declines in crude oil prices, this linkage will likely improve the affordability of gas for end-users. 

Conclusion 

These strategic updates to the Domestic Gas Allocation Policy aim to ensure a stable, affordable, and transparent supply of natural gas to millions of consumers across India. With better planning mechanisms and pricing transparency, CGD companies are now better positioned to meet rising urban energy demands efficiently. 

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