Government Introduces Advance, Pro-Rata Gas Allocation System for CNG and PNG
The Ministry of Petroleum and Natural Gas has announced key reforms to the domestic natural gas allocation policy, including two-quarter advance allocations and inclusion of New Well Gas (NWG) from ONGC and OIL, to enhance supply predictability and affordability for CNG and PNG segments under the City Gas Distribution network.
April 19, 2025. By Mrinmoy Dey
From Q1 FY 2025-26, domestic natural gas allocations for CNG and PNG segments will be done on a two-quarter advance basis. Further, allocation will also now include New Well Gas (NWG) from nomination fields of ONGC and OIL. Estimations by GAIL and ONGC will help ensure supply visibility to CGD entities in advance, enhancing planning and delivery efficiency, said the Ministry in a statement.
It further added that auction-based allocation for NWG has been replaced with a quarterly pro-rata allocation to ensure timely and reliable supply. GAIL will allocate NWG to CGD entities in proportion to their requirements, in accordance with prevailing MoPNG guidelines.
Despite increasing demand in the CGD sector, allocation ratios of domestic gas have broadly been maintained. In Q3 FY 2024–25, 54.68 percent of projected demand was allocated. Allocation in Q1 FY 2025–26 has increased to 55.68 percent. The projected allocation in Q2 FY 2025-26 stands at 54.74 percent.
“Broad trajectory in domestic gas allocation reflects the Government’s commitment to prioritise public-facing segments like transport and domestic cooking,” it said.
As both APM gas and New Well Gas prices are linked to Indian Crude Basket prices, calculated monthly, with the recent decline in crude prices, this allocation of domestic gas would make natural gas more affordable for CNG and PNG consumers.
“These strategic measures by the Government will lead to enhanced ability of CGD entities to forecast demand and manage supply efficiently, improved supply predictability and better affordability for CGD companies due to crude-linked pricing,” it said.
It further asserted that these measures will ensure a stable, affordable, and transparent domestic gas supply system for the critical transport and domestic segments under the CGD network, benefitting millions of urban and semi-urban consumers across India.
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