Petroleum Ministry Reforms Gas Allocation Policy

(MENAFN- KNN India) New Delhi, April 19 (KNN) The Ministry of Petroleum and Natural Gas (MoPNG) has implemented significant policy measures to the Domestic Gas Allocation Policy.

These measures were taken with particular emphasis on ensuring sustained availability and affordability of natural gas for key public-facing segments-Compressed Natural Gas (CNG) for transportation and Piped Natural Gas (PNG) for domestic household cooking.

Under the revised policy framework, domestic natural gas allocations for CNG and PNG segments will be conducted on a two-quarter advance basis beginning from Q1 FY 2025-26.

This advance allocation will now include New Well Gas (NWG) from nomination fields of Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL).

Estimations provided by GAIL and ONGC will ensure improved supply visibility to City Gas Distribution (CGD) entities, thereby enhancing their planning and delivery efficiency.

The Government has also replaced the auction-based allocation system for NWG with a quarterly pro-rata allocation mechanism to ensure timely and reliable supply.

Under this arrangement, GAIL will allocate NWG to CGD entities proportionate to their requirements, in accordance with prevailing MoPNG guidelines.

Despite increasing demand in the CGD sector, the Government has maintained consistent allocation ratios of domestic gas.

For Q3 2024-25, 54.68 percent of projected demand was allocated, while Q1 2025-26 saw a slight increase to 55.68 percent, with Q2 2025-26 projected at 54.74 percent.

The pricing mechanism for both Administrative Price Mechanism (APM) gas and New Well Gas remains linked to Indian Crude Basket prices, calculated on a monthly basis.

The recent decline in crude prices suggests that this allocation of domestic gas would make natural gas more affordable for CNG and PNG consumers.

These policy measures are expected to significantly improve the ability of CGD entities to forecast demand and manage supply efficiently.

The measures will also ensure better supply predictability and affordability for CGD companies due to crude-linked pricing, ultimately establishing a stable, affordable, and transparent domestic gas supply system for critical transport and domestic segments under the CGD network.

(KNN Bureau)

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