The Ministry of Petroleum and Natural Gas has clarified that the revised pricing framework for Compressed Biogas (CBG) under the GOBARdhan scheme is designed to provide greater financial stability to producers while keeping the impact on CNG and household PNG consumers limited.

The government has rejected concerns that the revised CBG procurement price would lead to a significant increase in costs for consumers. Under the new framework, the procurement price for CBG has been fixed at ₹2,110 per MMBtu, compared with the prevailing effective price of around ₹1,478 per MMBtu. The revised rate represents an increase of about 43 per cent at the procurement level, but the ministry said this figure should not be interpreted as a direct increase in CNG or PNG prices. 

New Pricing Framework

The revised mechanism aims to provide CBG producers with a more predictable and viable price. The government has also introduced affordability support of ₹10 per kg of CBG, equivalent to approximately ₹215 per MMBtu for CBG containing 95 per cent methane.

After taking this government support into account, the effective CBG cost that needs to be recovered through the gas consumer base is estimated at around ₹1,895 per MMBtu. According to the ministry, this represents an effective increase of roughly 28 per cent over the earlier effective price, rather than the full 43 per cent increase in the headline procurement price. 

Why Consumers May See Limited Impact

The Petroleum Ministry has also clarified how the revised CBG cost will be recovered. CBG will not be sold directly to City Gas Distribution companies at the revised procurement price. Instead, it will be pooled with other domestically produced natural gas.

Under the earlier mechanism, the cost of CBG was distributed across a relatively limited pool of gas allocated to the CNG transport and domestic PNG segments. Under the revised framework, the applicable domestic gas pool is expected to be approximately 2.5 to three times larger.

The wider pool means the additional cost will be distributed across a significantly larger volume of domestic gas, reducing the potential impact on individual consumers. 

Boost for CBG Producers

The revised pricing mechanism is aimed at addressing concerns over the long-term viability of CBG production. By offering a stable administered price, the government expects producers to have greater revenue visibility and improved confidence to operate and expand their facilities.

The Union Cabinet had earlier approved the national GOBARdhan scheme with an outlay of ₹23,731 crore. The scheme establishes a stable administered CBG price of ₹2,110 per MMBtu and combines government support with a market-based cost-sharing mechanism intended to protect consumers.

Focus on Clean Energy

Compressed Biogas is produced from organic waste and other biomass sources and is intended to contribute to India’s clean-energy transition. The GOBARdhan framework seeks to promote the use of waste as a resource while expanding domestic production of renewable gas.

The government’s approach combines producer support with measures aimed at preventing a substantial increase in the burden on consumers. The ministry said the revised framework has been designed to balance the financial sustainability of CBG plants with consumer affordability. 

What It Means for CNG and PNG Users

For consumers, the key distinction is between the CBG procurement price and the retail price of CNG or PNG. The revised ₹2,110 per MMBtu rate is the price paid to CBG producers and is not the price directly charged to households using PNG or motorists using CNG.

With government-funded affordability support and a larger domestic gas pool, the ministry expects the impact on CNG and household PNG consumers to remain limited.

The revised mechanism therefore seeks to strengthen India’s emerging CBG sector without transferring the entire increase in producer procurement costs directly to consumers.

India's cooking fuel system is under significant strain as ongoing conflict in West Asia continues to disrupt energy shipments through the Strait of Hormuz — one of the world's most critical maritime corridors. The country imports roughly 60 per cent of its liquefied petroleum gas requirement, and nearly 90 per cent of those imports transit the Strait before reaching Indian shores.

With LPG tanker traffic severely disrupted, the government has moved swiftly on multiple fronts — tightening cylinder booking rules, curbing commercial allocations, and accelerating a broader policy shift away from cylinders and towards piped natural gas.

LPG Rationing Already Underway

The pressure on LPG supply has translated directly into tighter rules for consumers. The minimum gap between LPG bookings has been extended from 21 days to 25 days as a demand-management measure. Rural consumers under the Pradhan Mantri Ujjwala Yojana now face a 45-day refill cycle. Commercial LPG allocations have been slashed to a fraction of normal volumes.

The government has also expanded the Delivery Authentication Code system to close to 90 per cent of consumers to check diversion at the distributor level. Officials have urged the public not to panic, stating that measures are being taken to maintain supply balance — but the rationing signals the depth of the supply stress.

Why PNG Is Holding Up

For the roughly 1.47 crore households connected to piped natural gas networks, the crisis has been largely invisible. Gas continues to flow through buried polyethylene pipelines at consistent pressure, powering kitchen stoves without interruption. The structural reason for this resilience lies in how PNG reaches homes.

Natural gas is shipped as liquefied natural gas, chilled to minus 162 degrees Celsius, transported by sea to India's regasification terminals, warmed back into gas, and then fed into the national trunk pipeline grid. The pipeline system itself holds gas under continuous pressure. When a supply disruption hits, PNG consumers are buffered by gas already stored in distribution networks and at import terminals — a buffer that LPG's cylinder-and-delivery model simply does not have.

LPG, by contrast, is a blend of propane and butane compressed into liquid form and shipped in specialised pressurised tankers. When the Strait closes or slows, the supply chain has no real cushion between the tanker terminal and the kitchen.

Government Orders the Switch

The Centre has used the crisis to push a structural shift it has long sought. Under the newly notified Natural Gas and Petroleum Products Distribution Order, 2026, issued under the Essential Commodities Act, households in areas with existing PNG pipeline infrastructure have been given a 90-day window to switch from LPG to piped gas. Those who do not transition within this period may face discontinuation of their LPG supply.

Priority PNG connections are being mandated for residential schools, colleges, hostels, community kitchens, anganwadi kitchens, restaurants, hotels, and canteens. Domestic PNG and CNG transport sectors continue to receive 100 per cent supply allocation, while industrial and commercial users connected to the grid are being maintained at around 80 per cent of average consumption.

Critically, the government has also barred PNG-connected households from retaining LPG cylinders as backup — a move to prevent hoarding and ensure equitable cylinder distribution to those who have no pipeline alternative.

The Numbers Tell the Story

India has over 33 crore LPG connections — one of the largest such networks in the world. PNG connections, by comparison, stand at approximately 1.62 crore, concentrated almost entirely in urban areas. The gap is enormous, but the government estimates that around 60 lakh LPG consumers already live in areas where PNG pipelines exist, making them immediate candidates for migration.

City gas distribution companies — Indraprastha Gas Limited, Mahanagar Gas Limited, Gujarat Gas, GAIL Gas, and BPCL — have been directed to prioritise new PNG connections. Applications have picked up sharply in recent weeks, with urban adoption accelerating as the cylinder pinch bites.

PNG's Real Advantages

Beyond supply security, the case for PNG rests on several practical grounds. Gas flows continuously without the need to book, wait, or store a cylinder. Billing is metered, similar to electricity, so consumers pay only for what they use rather than for a full cylinder regardless of consumption.

On safety, natural gas is lighter than air and disperses upward if leaked, whereas LPG settles near the ground, raising fire risk in poorly ventilated kitchens. On cost, PNG typically works out 30 to 40 per cent cheaper for urban consumers once the multiple layers of bottling, transport, and dealer margin are stripped out of the supply chain.

The Limits of PNG's Resilience

However, PNG's insulation from the Hormuz crisis has never been absolute. India's natural gas import portfolio remains heavily dependent on Qatar, with long-term contracts concentrated at the Ras Laffan industrial complex. Attacks on Gulf gas infrastructure earlier in March threatened to extend the crisis from LPG to the piped gas network as well, exposing a structural irony: India's push to shift from one Gulf-dependent fuel to another may not represent the diversification it appears to be.

The government has acknowledged this, with the Ministry of Petroleum stating that efforts are underway to diversify sources — including LNG spot cargoes from the United States and a supply agreement with Norway's Equinor. Pipeline expansion targets 12.63 crore PNG connections by 2032, and LNG import capacity is planned to reach 66.7 million tonnes per year by 2030.

What Happens Next

The Hormuz crisis has compressed what was always a long-term energy transition into an immediate policy emergency. For urban households already in the coverage zone of a city gas distribution network, the choice is no longer optional — the switch to piped natural gas is now a government directive with a deadline.

For the hundreds of millions of rural consumers where pipelines do not yet reach, LPG cylinders remain the only practical option. Expanding PNG across India's dispersed geography will take years of infrastructure investment. Until then, the Strait of Hormuz will continue to hold a disproportionate say over what fuel burns in the average Indian kitchen — and at what cost.