Industry-specific uniform gas price under study

The option of having an industry-specific uniform gas price is being considered by the stakeholders, including industry players and the Government.

“Deliberations are going on between the stakeholders, on the draft report submitted by a Spanish consultant regarding the feasibility of uniform gas pricing. One of the options being considered is an industry-specific (power, fertiliser and others) uniform ,” an official source said.

The Government is looking at the feasibility of a uniform price regime for gas and GAIL Ltd was asked to conduct the study. GAIL had appointed a Spanish consultant, Marcados Energy Market Pvt Ltd, to undertake a study on the feasibility of such a proposal, including legal and technical issues to be addressed in case of a uniform price. The final report is expected next month.

Pooled price

Explaining the concept of industry-specific uniform gas price, sources told Business Line that “it would mean that the end-consumers of the said sector, whether it is fertiliser or power, get gas at the pooled price derived for that industry category.” In other words, if the allocation of gas for the power sector is 40 million standard cubic metres a day (mscmd), a pooled price from all the gas sources would be worked out for that quantity.

Agreeing that this may not be easy, sources said, “Dynamics of such a pooling price are being worked out. There are a lot of legal and technical issues that need to be addressed, such as the pricing regime should not violate the contract, whose network should be utilised for the purpose, and who will be nominated to buy the gas. It has to be a transparent pricing mechanism.”

Currently, there are different types of gas pricing regimes – gas sold at administered price, under production-sharing contract such as those from joint venture fields, under the New Exploration Licensing Policy, as well as R-LNG (re-gassified liquified natural gas). Thus, the delivered price ranges from $2 per million British thermal units (mBtu) to more than $7/mBtu.

Source: Hindu Business Line

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