**Policy Summary: Domestic Gas Allocation Policy (Effective FY 2025-26)**
This document summarizes the revised policy for the allocation of domestically produced natural gas to City Gas Distribution (CGD) entities in India, effective from the first quarter of FY 2025-26. The policy addresses concerns regarding supply predictability and affordability for urban and semi-urban consumers.
**Key Changes:**
* **Allocation Period:** The allocation of natural gas for CNG (Transport) and PNG (Domestic) segments is now provisionally made on a two-quarter advance basis, replacing the previous single-quarter allocation system.
* **Gas Sources:** The allocation scope has been broadened to include Administered Pricing Mechanism (APM) gas, Non-Administered Pricing Mechanism (NAPM) gas, and New Well Gas (NWG) from nomination fields of Oil and Natural Gas Corporation Limited (ONGC).
* **NWG Allocation Mechanism:** The previous auction-based allocation for NWG has been replaced with a quarterly pro-rata allocation managed by GAIL (India) Limited. This allocation is proportional to the requirements of CGD entities and is in accordance with the prevailing guidelines of the Ministry of Petroleum and Natural Gas.
* **Price Mitigation:** To address rising natural gas prices, the government approved revised domestic natural gas pricing guidelines on April 7, 2023. These guidelines apply to gas produced from ONGC/OIL nomination fields, New Exploration Licensing Policy (NELP) blocks, and pre-NELP blocks where Production Sharing Contracts (PSC) require government approval of prices. The price is determined as 10% of the monthly average of the Indian Crude Basket and is notified monthly.
* **APM Price Controls:** For gas produced by ONGC and OIL from their nomination blocks, the Administered Price Mechanism (APM) price is subject to a floor of $4.0/MMBTU and a ceiling of $6.5/MMBTU. The ceiling will be maintained for the financial years 2023-24 and 2024-25 and then increased by $0.25/MMBTU each year.
**Objectives:**
The revised policy aims to achieve better demand forecasting, efficient supply management, and enhanced supply predictability for CGD entities, while also ensuring price stability for consumers.
Key Entities Referenced
City Gas Distribution CGD: Refers to the entities involved in distributing gas to consumers in cities.
Ministry of Petroleum and Natural Gas: The Indian government ministry responsible for policies related to petroleum and natural gas.
CNG: Compressed Natural Gas, a fuel used in vehicles and supplied by CGD entities.
PNG: Piped Natural Gas, supplied to households and industries by CGD entities.
Administered Pricing Mechanism APM: A mechanism for setting the price of natural gas.
Non Administered Pricing Mechanism NAPM: Another mechanism for setting the price of natural gas.
New Well Gas NWG: Natural gas produced from newly drilled wells.
Oil and Natural Gas Corporation Limited ONGC: A major Indian oil and gas exploration and production company.
LOK SABHA
UNSTARRED QUESTION No. 4661
TO BE ANSWERED ON 21ST August, 2025
DOMESTIC GAS ALLOCATION POLICY
†4661. DR. ALOK SHARMA:
SHRI BHARATSINHJI SHANKARJI DABHI:
SHRI MANOJ TIWARI:
SHRI JANARDAN MISHRA:
SHRI KHAGEN MURMU:
DR. LATA WANKHEDE:
पेट(cid:332)ोिलयम और (cid:366)ाकृ ितक गैस मं(cid:361)ी
Will the Minister of PETROLEUM AND NATURAL GAS be pleased to state:
(a) whether the Government has recently amended the methodology of allocation of domestically
produced natural gas to the City Gas Distribution (CGD) entities;
(b) if so, the details of the new gas allocation mechanism and the manner in which the same
differs from the earlier system;
(c) whether any provision for advance allocation of natural gas to CGD areas has been made
under the new policy and if so, the details thereof; and
(d) the steps being taken to ensure affordability and supply predictability for the urban and semi-
urban consumers under the new policy framework?
ANSWER
पेट(cid:332)ोिलयम और (cid:366)ाकृ ितक गैस मं(cid:361)ालय म(cid:336) रा(cid:475)मं(cid:361)ी
((cid:373)ी सुरेश गोपी)
MINISTER OF STATE IN THE MINISTRY OF PETROLEUM AND NATURAL GAS
(SHRI SURESH GOPI)
(a) to (d) The Government reviews its policy from time to time for allocation of domestically
produced natural gas to City Gas Distribution (CGD) entities.
Under the revised framework, effective from the first quarter of FY 2025–26, allocations
for CNG (T) and PNG (D) segments are provisionally made on a two-quarter advance basis as
against the earlier practice of allocating on a single-quarter basis. The scope of allocation now
includesboth Administered Pricing Mechanism (APM)/ Non Administered Pricing Mechanism
(NAPM) gas and New Well Gas (NWG) from nomination fields of Oil and Natural Gas
Corporation Limited (ONGC).The earlier auction-based allocation for NWG has been replaced
with a quarterly pro-rata allocation by GAIL (India) Limited to CGD entities in proportion to
their requirements, in accordance with prevailing guidelines of the Ministry of Petroleum and
Natural Gas. This ensures better demand forecasting, efficient supply management, and
enhanced supply predictability for CGD entities.Further, in order to minimize the impact of rising Natural Gas prices, the Government has
approved the revised domestic natural gas pricing guidelines vide Gazette Notification dated
07.04.2023 for gas produced from nomination fields of ONGC/OIL, New Exploration Licensing
Policy (NELP) blocks, and pre-NELP blocks, where the Production Sharing Contract (PSC)
provides for Government approval of prices. Under the revised guidelines, the price of such
natural gas is determined as 10% of the monthly average of the Indian Crude Basket and is
notified on a monthly basis. For gas produced by ONGC and OIL from their nomination blocks,
the Administered Price Mechanism (APM) price is subject to a floor of $4.0/Metric Million
British Thermal Unit (MMBTU) and a ceiling of $6.5/MMBTU. The ceiling would be
maintained for the two financial years (2023-24 and 2024-25) and then increased by
$0.25/MMBTU each year. This has led to price stability for consumers.
****