India’s natural gas market is starting to show tangible benefits for consumers from the Petroleum and Natural Gas Regulatory Board’s (PNGRB) recent overhaul of pipeline tariffs, with city gas operators beginning to reduce CNG and piped natural gas (PNG) prices.
While Think Gas has already announced reductions in CNG and domestic PNG prices across multiple states ahead of the new tariff regime taking effect on January 1 2026, other city gas operators are likely to announce rate cuts in the coming days.
Regulatory overhaul
PNGRB on December 16 announced a rationalised tariff structure for pipelines that move natural gas – the feedstock for generating electricity, producing fertiliser, making CNG and used as fuel in household kitchens. This makes natural gas transportation simpler, fairer and more cost-effective for consumers and the city gas distribution sector.
Under the revised regime, effective January 1, 2026, the number of distance-based tariff zones has been reduced from three to two – up to 300 km and beyond – with a single lower Zone-1 rate (around Rs 54 per million British thermal unit) now applied nationwide for CNG and domestic PNG customers regardless of distance from the gas source, according to PNGRB.
This marks a departure from the earlier three-tier system, which charged progressively higher rates for longer distances, and is expected to trim delivered gas costs by thousands of crores annually, directly translating into lower prices for end-users.
The reform underpins the ‘One Nation, One Grid, One Tariff’ vision, reduces regional disparities in transportation costs, and aligns natural gas more competitively with other fuels, thereby supporting wider adoption of cleaner energy.
Rate cuts by companies
Think Gas announced a cut of up to Rs 2.50 per kg in CNG prices for customers in Uttar Pradesh, Bihar, and Punjab, as well as a reduction of around Rs 3 per standard cubic metre in domestic PNG, reflecting lower transportation costs under the revised unified tariff framework.
The firm has also planned cuts of up to Rs 5 per scm in other regions and voluntary price reductions in states not yet grid-connected as part of its consumer-centric pricing strategy.
Industry stakeholders welcomed the development as a direct outcome of PNGRB’s forward-looking regulatory steps to simplify gas transmission charges and reduce zonal disparities.
The Association of City Gas Distribution Entities (ACE) praised PNGRB’s Unified Tariff (UFT) order of December 16. Its Director General, Subhash Kumar, said the reform is a landmark move that will boost the accessibility and affordability of natural gas, support the adoption of cleaner fuels, and strengthen investor confidence while safeguarding consumer interests.
Significance of policy change
The simplification of the Unified Tariff structure, rationalisation of tariff zones, and introduction of operational measures for improved monitoring and transparency reflect PNGRB’s balanced regulatory approach – safeguarding consumer interests while ensuring the financial sustainability of pipeline infrastructure and reinforcing investor confidence, he said.
These measures, he observed, will substantially improve operational ease for CGD entities and stakeholders across the gas value chain.
ACE also underscored PNGRB’s consultative approach, highlighting its invitation for stakeholder input on a comprehensive review of the Access Code for Natural Gas Pipelines aimed at harmonising access, capacity booking and interoperability provisions.
The association reiterated its commitment to supporting PNGRB for the orderly, sustainable development of the natural gas and city gas distribution sector.
Natural gas currently makes up just over 6 per cent of the energy basket.