The policy will make the piped gas supply to urban homes a reality, especially in the city of Mumbai within next three years.The oil and gas exploration policy implemented by the government of India since 2000 has resulted in yielding large quantities of natural gas as the blocks are becoming operational.

The gas available will be to the tune of 100 million cubic meter initially. After meeting the primary demands from fertilizer, power and other industries the gas will be provided to urban household sector as cheaper and cleaner fuel for domestic purposes, the minister said.The policy framework will ensure incentives to investors for non-lucrative urban areas and a protected period for limited access to pipelines laid at a cost by the investor.

The investors will be encouraged to equally venture out in smaller cities other than metropolitan areas. Initially the emphasis will be on Mumbai as the natural gas network has spread only upto Tardeo so far. The Mahanagar Gas had begun its work 7-8 years ago, but the work has not gained the desired momentum. With the new policy and availability of gas, the city will have piped gas supply within a shorter period of time, the minister said.

The objective of the draft policy is to promote investment from public as well as private sector in natural gas pipeline and city and local natural gas distribution networks. The draft policy aims at facilitating open access for all players to the pipeline network on a non-discriminatory basis and promoting competition among entities, thereby avoiding any abuse of the dominant position by any entity. The main thrust of the policy is to secure consumer interest in terms of gas availability and reasonable tariff.

GAIL (India) Ltd is planning to expand its compressed natural gas (CNG) distribution network to 46 cities in the country over the next four years. At present, CNG, as a vehicle fuel, is available in Delhi, Mumbai, Agra, Kanpur and Lucknow. Cities like Ahmedabad, Chandigarh, Pune, Patna, Jodhpur, Hyderabad, Bangalore, Kolkata, Gwalior, Indore, Silchar, and Jaipur will soon be added to the list.

GAIL believes its CNG network expansion plan will work on the premise that the cost of running a vehicle on CNG is almost one-third that of petrol. The automobile industry has been demanding expansion of the network for a long time to ensure integrated inter-city transport on CNG fuel.Absence of a proper CNG network has forced some auto companies to abandon it in favour of other alternative fuels.

Market leader Maruti Udyog Ltd (MUL), which had launched CNG models earlier, has now opted for LPG due to its wider availability and convenient refuelling. "We had some CNG-compliant models, but its limited availability in the market and re-fuelling restrictions (CNG requires minimum pressure limits for re-fuelling) prompted us to opt for LPG. CNG can only be supplied through its feeder pipeline, while LPG is easily transportable to any part of the country. Now all our gas models run on LPG," said a senior official of MUL. However, a few other companies are still banking on the cheaper CNG. Hyundai will soon launch Santro’s CNG model, while Ford Ikon’s CNG variant will be out in November.

General Motors has already launched its premium sedan Optra on CNG. Ashok Leyland is launching CNG-run commercial vehicles early next year. The Society of Indian Automobile Manufacturers’ (SIAM) has been demanding easier availability of CNG along with standardisation of the auto-fuel. Dilip Chenoy, director general, SIAM, said, "The expansion of the CNG network will help customers when they travel to other cities, though the content of methane and other gases needs to be maintained in the fuel to have a proper calorific value and desired combustion in engines."