India offers city gas suppliers incentives to boost domestic piped connections

India is providing incentives to city gas suppliers to increase the number of domestic piped connections for cooking gas, according to the government. This move comes as the U.S.-Iran conflict disrupts fuel shipments and raises import costs. The announcement has led to a rise in shares of city gas distributors, with Indraprastha Gas up 3.5%, Mahanagar Gas up 4%, and Gujarat Energy up 0.5% on Wednesday.

India, which is the world's second-largest importer of liquefied petroleum gas (LPG), is using the crisis caused by the Middle East war to improve its distribution network and speed up the transition to piped gas. The aim is to reduce the country's reliance on LPG imports and the associated subsidies.

Under the incentive scheme, which starts from September, city gas distribution companies will receive an additional 200 standard cubic meters of cheaper, domestically produced gas for every household that connects to and starts paying for piped natural gas. This incentive is expected to help the government convert unused pipe connections into active, paying customers and expand the pipeline network to reach new households.

The ministry of petroleum and natural gas stated that the additional gas will help lower overall gas-sourcing costs and enable distributors to recoup their investment in new connections within three years, as opposed to the current average of about 10 years.

Since the start of the war, suppliers such as Indraprastha Gas, Mahanagar Gas, GAIL Gas, and Bharat Petroleum Corp have offered incentives like reductions in installation charges for piped gas connections. As of July 1, India had approximately 17.4 million domestic piped natural gas (PNG) connections, compared to about 331.4 million active household LPG customers.

India currently meets about 60% of its LPG requirements through imports, importing around 22 million metric tons of LPG in 2025, mostly from the Middle East, and spending nearly $12 billion.