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Policy measures for strengthening the allocation framework for domestic natural gas
18th April 2025
The Government has introduced key policy measures aimed at strengthening the allocation framework for domestic natural gas, in alignment with its vision of promoting cleaner energy access, enhancing urban air quality, and bolstering domestic energy security
With a focus on ensuring the sustained availability and affordability of natural gas for key public-facing segments—Compressed Natural Gas (CNG) used in transport and Piped Natural Gas (PNG) used in domestic households for cooking—the Ministry of Petroleum and Natural Gas (MoPNG) has introduced the following important enhancements to the Domestic Gas Allocation Policy:
- Advance Quarterly Allocation:
- NWG Allocation on Pro-Rata Basis:
- Allocation Ratios maintained:
- Pricing Linked to Indian Crude Basket:
From Q1 FY 2025-26, domestic natural gas allocations for CNG (T) and PNG (D) segments will be done on a two-quarter advance basis
Allocation will also now include New Well Gas (NWG) from nomination fields of ONGC and OIL
Estimations by GAIL and ONGC will help ensure supply visibility to CGD entities in advance, enhancing planning and delivery efficiency
Auction-based allocation for NWG has been replaced with a quarterly pro-rata allocation to ensure timely and reliable supply
GAIL will allocate NWG to CGD entities in proportion to their requirements, in accordance with prevailing MoPNG guidelines
Despite increasing demand in the CGD sector, allocation ratios of domestic gas have broadly been maintained:
Q3 2024–25: 54.68% of projected demand allocated
Q1 2025–26: 55.68% allocation
Q2 2025–26 (Projected): 54.74% allocation
Broad trajectory in domestic gas allocation reflects the Government’s commitment to prioritize public-facing segments like transport and domestic cooking
As both APM gas and New Well Gas prices are linked to Indian Crude Basket prices, calculated monthly, with the recent decline in crude prices, this allocation of domestic gas would make natural gas more affordable for CNG (T) and PNG (D) consumers
These strategic measures by the Government will lead to enhanced ability of CGD entities to forecast demand and manage supply efficiently, improved supply predictability and better affordability for CGD companies due to crude-linked pricing. These measures will ensure a stable, affordable, and transparent domestic gas supply system for the critical transport and domestic segments under the CGD network, benefitting millions of urban and semi-urban consumers across India