The government also made it clear that not more than one player will be allowed in any city or town.
The government had issued licenses to state-owned Gas Authority of India Ltd (GAIL) and Hindustan Petroleum Corporation Ltd (HPCL) last week for CNG distribution in four cities.
Though the state government has not put any exclusivity clause in its CNG distribution and licensing agreement, it has said only a single player will be allowed in each city.