India Turns to Piped Gas as Iran War Drives Up LPG Costs

India's government is taking steps to boost the use of piped gas for cooking in households as the price of LPG imports has risen due to the Iran conflict. The country's government has launched a scheme called the Incentive Scheme for Promotion of Domestic PNG Connections, which will kick off on September 1, 2026. This initiative aims to speed up the growth of active piped natural gas connections in homes nationwide.

LPG is commonly used for cooking in India, which is a big consumer of the fuel, and it is a significant importer of the substance. However, the ongoing war in the Middle East has cut off the supply of LPG from Persian Gulf producers, leading India to turn to other suppliers at higher costs. Roughly 60% of Indian families rely on LPG as their main cooking fuel, and the obstruction at the Strait of Hormuz, which used to carry 90% of India's LPG imports pre-war, has had a direct impact on consumers.

The government is now looking to offer incentives to City Gas Distribution (CGD) companies to rapidly convert unbilled connections into functional gas connections and expand the PNG network to new regions. Under this incentive scheme, eligible city gas distributors will receive an additional 200 standard cubic meters of domestically-produced, lower-priced gas for every new domestic PNG connection.

The government explains that the additional gas allocation will replace the more expensive liquefied natural gas (LNG) that CGD entities currently purchase for their compressed natural gas transport segment, thus reducing their overall gas-sourcing costs.