Households caught between LPG curbs, missing last-mile PNG connections

HoHouseholds in far-flung areas even along gas pipelines face a double whammy: state-run gas agencies have stopped issuing new domestic liquefied petroleum gas (LPG) connections in certain areas since March, while piped natural gas (PNG) suppliers often find it cheaper to pay penalties than bear the high cost of laying pipelines for last-mile connections, people familiar with the matter said.

The restriction has created difficulties for households that cannot access a PNG connection despite living in areas covered by a city gas distribution (CGD) licence, the people said. Meanwhile, CGD companies often do not extend pipelines to remote pockets within their authorised geographical areas because of the high cost of providing last-mile connectivity. This leaves some households dependent on more expensive 5kg and 10kg LPG cylinders. Some consumers also resort to buying domestic cylinders from the black market, they added.

Distributors have been instructed not to issue new domestic LPG connections, which come with a 14.2kg cylinder, in areas where PNG is available or being made available, the people said, requesting anonymity. They added that restrictions also apply to refills for existing connections in some such areas, even where households have not obtained individual PNG connections.

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A parliamentary panel flagged the problem in its report on “Supply and Distribution of Natural Gas – Challenges and Prospects”, presented in August. Explaining the constraints to the committee, the petroleum ministry said: “If we ask now whether PNG will reach every home, the answer is no, it will not. Because the initial cost of providing piped gas is very high.”

According to the ministry, CGD companies bid for licences to develop networks in specified geographical areas (GAs), committing to provide a certain number of PNG connections and establish a specified number of compressed natural gas (CNG) stations. Companies that fail to meet their targets face penalties determined by the Petroleum and Natural Gas Regulatory Board (PNGRB), the downstream regulator.

The ministry told the committee that it had asked the regulator to impose penalties on CGD companies for failing to meet their targets. “Some people say that these companies are happy to even pay that penalty because the cost of giving the pipe natural gas connection is more than the penalty…,” the report quoted the ministry as saying. The petroleum ministry, PNGRB and state-run energy companies, including Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and GAIL India, did not respond to email queries on the matter.

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In a written reply to the Lok Sabha on August 2, 2021, then petroleum minister Hardeep Singh Puri said penalties totalling ₹21.8 crore had been imposed on several CGD entities, including GAIL Gas Ltd, Aavantika Gas Ltd, Maharashtra Natural Gas Ltd, Siti Energy Ltd and Sanwariya Gas Ltd, for various violations.

A PNGRB presentation by its monitoring division in April 2026 showed that penalties totalling ₹34.31 crore had been imposed in 20 geographical areas for shortfalls in minimum work programme targets for domestic PNG connections and pipeline infrastructure.

Experts said the penalties were too small to incentivise companies to expand networks into commercially unviable areas, given the scale of the country’s ambitions for PNG and CNG infrastructure.

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Under the minimum work programme, authorised entities are required to provide approximately 12.6 crore domestic PNG connections and establish 18,336 CNG stations by 2034, the parliamentary committee report said. As of January 31, 2026, companies had provided around 1.63 crore domestic PNG connections and established 8,616 CNG stations, it added.