In a major move set to benefit millions of households and vehicle owners, India's gas regulator has announced a sweeping reform that will lead to cheaper compressed natural gas (CNG) and piped natural gas (PNG) across the country. The Petroleum and Natural Gas Regulatory Board (PNGRB) has rationalized pipeline transportation tariffs, a decision that promises to bring down regional price disparities and accelerate the adoption of cleaner fuel.
What is the New Tariff Structure?
Effective from 1 January 2026, the complex system of gas transportation charges will be dramatically simplified. The regulator has reduced the number of tariff zones from three to just two. For distances up to 300 km, the transportation charge will be fixed at ₹54 per metric million British thermal units (MMBtu). For distances beyond 300 km, the charge is set at ₹102.86 per MMBtu.
However, in a significant consumer-friendly measure, all domestic PNG and CNG users will be charged at the lower Zone 1 rate of ₹54/MMBtu, regardless of how far they are from the gas source. This replaces the 2023 regime which had three slabs: ₹42 (up to 200 km), ₹80 (200–1,200 km), and ₹107 (beyond 1,200 km). Transportation costs currently make up about 9% of the total gas cost for city gas distribution (CGD) companies.
Direct Impact on Consumer Wallets
The PNGRB estimates that this rationalization will cut transportation costs for the CGD sector by approximately ₹1,000 crore every year. These savings are expected to be passed on to end consumers. According to the regulator's projections, the move will reduce:
- CNG prices by ₹1.25 to ₹2.50 per kilogram.
- Domestic PNG prices by ₹0.90 to ₹1.80 per standard cubic metre (SCM).
Consumers located beyond 300 km will see the maximum benefit, with their transportation charges falling by nearly 50%. Anil Kumar Jain, Chairperson of PNGRB, emphasized that this creates national parity. "Now, a CNG or PNG consumer in Srinagar will pay the same transport tariff as a consumer in Mumbai or any other city close to the gas source," he stated.
Driving India's Gas-Based Economy
This reform is a strategic step towards achieving the government's target of increasing the share of natural gas in India's primary energy mix to 15% by 2030, up from the current 6%. Jain explained the rationale, noting that while LPG is subsidized and petrol/diesel prices are stabilized through cross-subsidization, regional variations in gas transport costs had previously kept CNG and PNG prices uneven, hindering wider adoption.
The CGD sector, which consumes about 21% of India's natural gas, has shown resilient growth. While overall gas consumption saw a dip in October 2025, CGD demand grew by 7% year-on-year. Over the past three years, PNG consumption grew at 8% annually and CNG at a robust 20%.
With 307 authorized geographical areas and a pipeline network of about 25,000 km, the CGD segment is poised to be the primary driver of future gas demand. It is projected to account for 29% of total consumption by 2030 and 44% by 2040. Furthermore, an anticipated increase in global gas supplies from 2028, with new facilities in the US and Qatar, could ease prices further and boost this transition.
