Gas Gamechanger: New Policy Shakes Up CNG and LPG Supply

SYNOPSIS

India’s recent APM gas price hike by 4% impacts CNG and LPG costs, affects consumers and gas companies, and supports cleaner energy goals through expanded access and a shift toward market-based pricing.

Gas Industry Revolution: Policy Shake-Up Transforms CNG and LPG Supply Dynamics

India's energy sector is undergoing a huge transformation. The government raised the APM gas price (Administered Pricing Mechanism price) by 4% for the first half of 2025–26, impacting the pricing and supply of Compressed Natural Gas (CNG) and Liquefied Petroleum Gas (LPG) across India. This will affect everyone from vehicle owners, households and energy distributors. Yet, what brought about this change and what does it mean for India's clean energy future?

Background: Why Was a Change Needed?

APM gas is natural gas whose price is controlled by the government. It is mainly allocated to priority sectors like CNG, power generation, and fertilizer production. For many years, the government kept prices low to support affordability and national development goals. However, rising global energy prices, increasing demand, and uneven gas distribution across regions created inefficiencies. Private players also struggled to compete because they had limited access to gas and no transparency concerning the gas pricing policies. These issues compelled the government to take policy action.

What Has Been Changed in the Policy?

The government raised the APM gas price from $6.5 to $6.75 per mmBtu (million British thermal units), from April 2025 to September 2025. As part of the focus on gas prices, the price hike is also in line with the Kirit Parikh Committee recommendations to gradually move gas pricing toward market pricing with protection for certain sectors. Another important development is the emphasis on city gas distribution (CGD), which supplies CNG for vehicles and piped natural gas (PNG) for households. The goal is to expand access to cleaner fuel across more cities, especially in Tier-2 and Tier-3 regions.

Impact on People and Businesses

Consumers:

CNG prices are likely to increase soon, especially in metro areas. This may affect auto, taxi, and delivery drivers. While LPG prices are stable for now, they could rise if input costs keep climbing.

Companies:

Firms like IGL and MGL may pass on cost increases to consumers. However, a more transparent policy may support their growth in new markets.

Government:

The policy aligns with India's long-term clean energy vision, addressing the use of natural gas to displace fossil fuels and promoting the usage of natural gas instead of coal, diesel, or petrol.

Challenges

India still has challenges ahead, including an undeveloped gas infrastructure and global pricing volatility; these factors could potentially impact consistent supply and prices.

Conclusion

The Policy could potentially change the energy landscape in India, any short-term obstacles aside. The document moves India to a cleaner, fairer, and more inclusive energy access.

Dhairya Mehta