The Government of India has unveiled a series of policy enhancements aimed at strengthening the allocation framework for domestic natural gas, a move that aligns with its vision of promoting cleaner energy access, improving urban air quality, and bolstering domestic energy security. These measures, introduced by the Ministry of Petroleum and Natural Gas, are expected to significantly benefit consumers relying on compressed natural gas for transportation and piped natural gas for cooking, thereby ensuring stable and affordable energy access to millions across urban and semi-urban regions in the country.
Under the updated Domestic Gas Allocation Policy, several strategic changes have been implemented to enhance the reliability and affordability of natural gas supplies. Beginning in the first quarter of the 2025–26 fiscal year, the allocation of domestic natural gas for transport and domestic household use will be carried out on a two-quarter advance basis. This marks a significant shift in the government’s approach, enabling better planning and supply-chain management for City Gas Distribution entities. Additionally, the allocation will now include New Well Gas sourced from nomination fields managed by state-owned enterprises ONGC and OIL, further increasing supply predictability.
To ensure that domestic gas supply remains accessible and equitable, the government has replaced the auction-based allocation system for New Well Gas with a quarterly pro-rata allocation. This policy adjustment empowers GAIL, the state-run gas authority, to allocate New Well Gas to City Gas Distribution companies in proportion to their specific requirements, adhering to the Ministry’s guidelines. Despite growing demand in the City Gas Distribution sector, the government has broadly maintained existing allocation ratios, underscoring its commitment to prioritizing public-facing segments such as transportation and domestic cooking.
The pricing mechanism for both APM Gas and New Well Gas has been linked to Indian Crude Basket prices, which are calculated on a monthly basis. This linkage ensures that any recent declines in crude prices are directly reflected in lower costs for natural gas consumers. By aligning pricing with crude oil trends, the government is effectively making natural gas more affordable for users of compressed natural gas and piped natural gas.
These measures are expected to yield far-reaching benefits for millions of consumers by enhancing the ability of City Gas Distribution entities to forecast demand and manage supplies efficiently. The improved predictability in domestic gas allocations, coupled with crude-linked pricing, will foster a transparent, stable, and affordable supply system for the transport and household segments of the City Gas Distribution network.
As the government continues to prioritize public welfare and environmental sustainability, these policy enhancements reflect a broader strategy aimed at driving India’s transition to cleaner energy solutions while ensuring equitable access to essential resources.
