New Delhi: The Cabinet Committee on Economic Affairs has approved 'Natural Gas Marketing Reforms' on Wednesday to give an impetus to the gas economy and cut India's dependence on imports. The three-pronged policy's objective is to prescribe standard procedure to discover market price of gas to be sold in the market by gas producers through a transparent and competitive process, permit affiliates to participate in bidding process for sale of gas and allow marketing freedom to certain Field Development Plans (FDPs) where Production Sharing Contracts already provide pricing freedom.
Briefing the media after announcing the new reforms, Petroleum Minister Dharmendra Pradhan said, "India currently produces 84 million standard cubic metres (MMSCM) of natural gas and imports the same amount. With the new reforms, 40 MMSCM will come into local production. Country's dependency on import of natural gas will reduce."
Announcing a new bidding process, Pradhan said, "Now the Directorate General of Hydrocarbons (DGH) will suggest an e-bidding platform. It will list all government entities and credible companies. The DGH will also issue guidelines in this regard. Producers will have a choice between different platforms in a transparent public domain akin to how coal, spectrum and mineral auctions take place in the country."
Although producing companies will not be allowed to take part in the bidding process, all other companies and affiliates will be allowed. "This will facilitate and promote more competition in marketing of gas. However, rebidding will have to be done in case only affiliates participate, and there are no other bidders," said an official statement.
"The policy aims to provide standard procedure for sale of natural gas in a transparent and competitive manner to discover market price by issuing guidelines for sale by contractor through e-bidding. This will bring uniformity in the bidding process across the various contractual regimes and policies to avoid ambiguity and contribute towards ease of doing business," it added.
The policy will also grant marketing freedom to the Field Development Plans (FDPs) of those blocks in which Production Sharing Contracts already provide pricing freedom. These reforms will build on a series of transformative reforms rolled out by the government in last several years.
"These reforms in gas sector will further deepen and spur economic activities and will prove very significant for Atmanirbhar Bharat by encouraging investments in the domestic production of natural gas and reducing import dependence. They will also help in creating employment opportunities in the gas consuming sectors, including MSMEs," the statement said.
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The government has taken transformative reforms in the upstream sector with a view to make investment easier focusing on ease of doing business. The Open Acreage Licensing Policy (OALP), which is investor-driven acreage auction process, has increased substantial acreages in the country. No blocks were allocated between 2010 and 2017 which has impacted the long-term viability of domestic production. Since 2017, more than 1.6 lakh square km area under 105 exploration blocks have been allocated. This will ensure sustainability of the domestic production in the long run, said the statement.
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