India revamps its gas policy to increase affordability and supply

India announced on Friday that it had made improvements to its domestic gas allocation policy in order to ensure the availability and affordability for natural gas.

The government announced that domestic gas allocations will begin in the first quarter fiscal 2026 for the compressed natural gas segment (CNG) as well as the piped natural-gas segment (PNG). This will be done two quarters ahead.

The allocation will now also include new well-gas (NWG) in nomination fields from the two state-explorers Oil and Natural Gas Corporation and Oil India. Auction-based allocations for new well-gas have been replaced by a quarterly pro rata allocation to ensure timely and reliable supplies, according to the statement.

The government is aiming to reduce the cost of natural gas for CNG and consumers of PNG by implementing both the administered pricing mechanism (APM) gas and the new well gas prices that are linked to Indian crude price baskets, calculated on a monthly basis.

APM allocations have decreased over time due to lower production at domestic wells. In the last few quarters, India's city-gas distribution companies, such as Mahanagar Gas and Indraprastha Gas have seen their margins slashed.

The government cut the APM gas allocation for city gas distribution companies from April 16 by 18%-20%.

(source: Reuters)