The government has approved an incentive scheme to accelerate domestic piped natural gas (PNG) connections while also exploring the possibility of making E10 petrol available alongside E20 fuel for older vehicles, as it looks to expand access to cleaner energy and address concerns over fuel compatibility.
The Incentive Scheme for Promotion of Domestic PNG Connections will come into effect from September 1, 2026, and aims to encourage City Gas Distribution (CGD) companies to convert unbilled PNG connections into active, billed connections and expand household PNG networks into new areas.
India currently has around 1.74 crore domestic PNG connections. Under the scheme, eligible CGD entities will receive incentives for every incremental billed domestic PNG connection achieved above the threshold fixed for their respective geographical areas.
CGD entities will be allocated an additional 200 SCM of domestically produced, lower-priced APM gas for every incremental billed domestic PNG connection achieved during the performance period. The scheme will be implemented in two tranches over six months.
The additional APM gas allocation is expected to help CGD companies substitute costlier liquefied natural gas (LNG) currently procured for their Compressed Natural Gas (Transport) segment. The government expects the resulting savings to reduce the payback period on capital expenditure for domestic PNG connections from around 10 years to approximately three years.
The move is expected to encourage CGD companies to expand their networks and connect more households to piped cooking gas.
PNG is supplied directly to homes through underground pipelines, eliminating the need to book, store and replace LPG cylinders. Consumers are billed according to their actual metered consumption.
The government also considers PNG safer and cleaner than several conventional cooking fuels, as it is supplied at low pressure and is lighter than air, allowing it to disperse quickly in case of a leak. Its cleaner combustion can also help reduce indoor air pollution and carbon emissions.
Meanwhile, the Central government has begun preliminary discussions on whether E10 petrol, containing 10 per cent ethanol, could be made available as an option for older vehicles alongside E20 fuel.
The discussions are at an early stage, with officials examining technical and non-technical aspects, including the feasibility of supplying and retailing different fuel blends. No final decision has been taken.
The proposal comes amid concerns among owners of older vehicles and two-wheelers that were designed for lower ethanol blends. E20 petrol contains 20 per cent ethanol and has become the standard petrol grade across the country from April 1, 2026.
The government has maintained that E20 does not damage vehicle engines, while acknowledging that older vehicles could experience a mileage reduction of around 3-5 per cent. The issue has sparked a wider debate over fuel compatibility and consumer choice.
Chief Economic Adviser V. Anantha Nageswaran has backed the idea of making E10 available alongside E20, arguing that a lower ethanol blend could address concerns among owners of older vehicles while allowing India to continue its ethanol-blending programme.
However, offering both E10 and E20 would create logistical challenges for oil companies, which would need separate infrastructure for storing, blending, transporting and retailing the two fuel grades.
The discussions come as India continues to promote ethanol blending to reduce crude oil imports and strengthen energy security. India has already achieved its 20 per cent ethanol-blending target ahead of the original deadline.
With the PNG incentive scheme and the E10 discussions, the government is examining measures across the energy sector aimed at improving access, reducing costs and addressing consumer concerns.
For now, the E10 proposal remains under consideration, while the PNG incentive scheme is set to take effect from September 1.
