The grid, which has been inaugurated, will cover an area of 1,535 sq km, it added.
About 1 lakh households are likely to be covered in the project.
Work on the project had started in late 2016.
Piped Natural Gas (PNG) connection work for 8,000 houses has been completed which are expected to be connected by March 2019.
About 800 km of steel and MDPE pipelines will be laid in the city as part of the project. Steel pipeline has already been laid for 28 km and medium density polyethylene (MDPE) pipe laying for 102 km completed.
The CGD network will also cover four industrial areas and can cater to 150 industries and 500 commercial enterprises.
“It is expected to give direct employment to 1,000 people and indirect employment to many more,” GAIL said.
As part of the network, 20 CNG stations are also being put up, out of which two are already working.
Overall, 20,000 vehicles are expected to use CNG in the city, GAIL said.
The Varanasi CGD project was developed simultaneously with the Jagdishpur — Haldia & Bokaro — Dharnra/ Barauni- Guwahati Pipeline Project (JHBDPL/BGPL).
The pipeline project of total length 3,291 km is being executed at the cost of about Rs. 13,000 Crore.
It is expected to bring gas-based energy to the North and East of the country. At present, gas-based energy is being used largely in Gujarat, and to some extent in Maharashtra.
It will cater to the energy requirements of Uttar Pradesh, Bihar, Jharkhand, West Bengal, Odisha and Assam covering 70 districts and 3,150 villages.
Besides Varanasi, CGD networks are also being developed by GAIL at Patna, Jamshedpur, Ranchi, Bhubaneswar and Cuttack enroute the pipeline.