Mint Explainer | How PNGRB’s tariff reset could lower CNG and PNG prices

The regulator has reduced the number of tariff zones from three to two—up to 300 km and beyond 300 km—aiming to lower regional disparities and align natural gas pricing with competitive fuels such as liquefied petroleum gas (LPG), or cooking gas, and petrol.

Mint explains what the change means for consumers and the city gas distribution (CGD) sector.

What is changing?

From 1 January 2026, transportation charges will be ₹54 per metric million British thermal units (MMBtu) for distances up to 300 km and ₹102.86 per MMBtu beyond 300 km. However, all CNG and domestic PNG consumers will be charged the Zone 1 rate of ₹54 per MMBtu, irrespective of distance.

This replaces the 2023 tariff regime, under which pipeline charges were split into three slabs: ₹42 for up to 200 km, ₹80 for 200–1,200 km, and ₹107 for distances beyond 1,200 km. Transportation currently accounts for about 9% of the overall cost of natural gas procured by CGD players.

How will the move impact consumers?

The revised tariff structure will result in nearly 50% lower transportation charges for consumers located beyond 300 km. With uniform transportation tariffs across the country, retail consumers are expected to directly benefit through lower CNG and PNG prices, according to PNGRB.

PNGRB estimates the revised tariffs will reduce CGD transportation costs by around ₹1,000 crore annually, translating into lower delivered prices for consumers—CNG by ₹1.25-2.50 per kg and domestic PNG by ₹0.90-1.80 per standard cubic metre (SCM).

Why was there a need to rationalize tariff slabs?

The tariff rationalization is aimed at expanding natural gas adoption in line with the government’s target of raising its share in India’s energy basket to 15% by 2030, from the current 6%.

Explaining the rationale, PNGRB chairperson Anil Kumar Jain told Mint that LPG used for cooking is subsidized, while petrol and diesel prices have remained relatively stable across the country due to cross-subsidization. In contrast, regional variations in gas transportation costs had kept CNG and PNG prices uneven.

“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, thereby bringing parity," Jain said.

What has been the trend in natural gas consumption?

India’s natural gas consumption has weakened so far in FY26 after strong demand in FY25. In October, consumption stood at 5,722 million standard cubic metres (mmscm), down 14.6% from 6,699 mmscm a year ago.

For FY25, total gas consumption rose 5.6% year-on-year to 71,314 million standard cubic metres per day (mmscmd), compared with 67,512 mmscmd in FY24, driven largely by strong demand from the power sector. The recent slowdown has been led by weaker demand from power and fertiliser segments.

City gas distribution, which accounts for about 21% of overall gas consumption, has remained resilient. CGD consumption grew 7% year-on-year in October, while over the past three years, PNG and CNG consumption has grown at annual rates of 8% and 20%, respectively.

What is the outlook for the city gas distribution segment?

India has 307 authorized geographical areas under various CGD auction rounds and an operational natural gas pipeline network of about 25,000 km. City gas distribution, which includes CNG and domestic PNG, is expected to be the primary driver of natural gas demand in the coming decades.

CGD is projected to account for 29% of total gas consumption by 2030 and 44% by 2040. Additionally, an expected increase in global gas supplies from 2028, as new facilities in the US and Qatar come on stream, could ease prices further and accelerate adoption.