IEA says India should free gas pricing

PTI New Delhi

International Energy Agency (IEA) on Wednesday asked India to free up its pricing of natural gas and unbundling of marketing and transportation business to help increase usage of the fuel in the economy.

 IEA in the India Gas Market Report: Outlook to 2030 projected the country's gas consumption rising by 60 per cent to 103 billion cubic metres (bcm) annually by the end of the decade. As India targets raising the share of relatively cleaner natural gas in its energy basket to 15 per cent by 2030 from just above 6 per cent currently, IEA prescribed a set of policy reforms to usher in its greater use.

Pricing of gas, which is used to generate electricity, make fertilisers and turned into CNG to power automobiles and piped to household kitchens for cooking, is skewed. Gas from legacy fields of state-owned firms like ONGC and Oil India Ltd is currently capped at USD 6.5 per million British thermal unit while there are limits also imposed on fuel from difficult and high costing fields like deepsea. "The anticipated easing of global gas market conditions in the latter half of the decade provides an opportunity for the government to implement full gas pricing freedom within the forecast horizon," IEA said.

Calling for transition to gas pricing freedom for all fields, the report said gradually extending gas pricing freedom to all fields, as recommended by the Kirit Parekh Committee in 2022, could stimulate greater investment in the upstream sector and improve the long-term availability of gas for India's consumers.

"A phased approach is advisable to protect consumers from price volatility during the transition. Initial measures could include lifting the price ceiling on deepwater and ultra-deepwater high pressure/high temperature projects and allowing upstream producers to sell a larger portion of their domestic production freely on the Indian Gas Exchange (IGX) than is currently permitted," it said.