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

India's government is aiming to boost the use of piped gas for cooking by offering incentives to city gas distributors. The rising cost of importing liquefied petroleum gas (LPG) due to the Iran war has strained the country's supply of domestic cooking gas. As a result, the government has introduced the Incentive Scheme for Promotion of Domestic PNG Connections, slated to begin on September 1, 2026.

This initiative seeks to accelerate the growth of piped natural gas (PNG) connections across households. With around 60% of Indian households currently relying on LPG for cooking, the closure of the Strait of Hormuz, through which 90% of LPG imports previously passed, has directly impacted consumers.

The scheme will encourage city gas distributors (CGD) to convert unbilled connections into working gas connections and expand the PNG network to new regions. Eligible CGDs will receive an additional 200 standard cubic meters of domestically-produced, lower-priced gas for each new domestic PNG connection. This allocation will replace the higher-cost liquefied natural gas (LNG) typically procured by CGD entities for their Compressed Natural Gas (Transport) segment, ultimately reducing their overall gas-sourcing expenses. The government has planned the incentive scheme in two tranches over a six-month period.