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India’s gas trading hub likely to be launched by March 2020

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New Delhi: The country’s largest power trading platform, Indian Energy Exchange, is planning to unveil India’s first gas trading hub by March 2020. The government’s major gas-pricing reform, a gas exchange, has been in the pipeline for quite a while now and has been a long-standing demand from the industry.

The news was shared by Indian Energy Exchange’s strategies director Rajesh Mediratta in an interview with Bloomberg.
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The power trading platform has been working on putting together the infrastructure and a team of about 20 officials to run the bourse, Mediratta said.

‘Gas trading hub will bring down price of natural gas’

The gas exchange will help bring down the price of natural gas through competitive trade, boosting usage in a country that relies heavily on cheaper coal for its energy needs, the India Energy Exchange strategies director said.

Policy hurdles on the way

Even as the gas trading hub is set for a launch, India’s gas market is awaiting uniform trading rules and freedom for consumers to buy the fuel from wherever they want. A plan to allocate a certain volume of domestic gas for trading at exchanges is also yet to be approved by the Centre. Also, the issue of bringing gas within the ambit of the Goods and Services Tax (GST) regime is yet to be resolved.

The backdrop

India’s plan to have a gas exchange has been in the pipeline for a few years now. However, it has assumed a lot more urgency in the past few years due to India’s deteriorating air quality and its increasing dependence on crude oil imports as domestic production declines. At ADIPEC 2019, Petroleum Minister Dharmendra Pradhan had said that India is looking to increase the share of natural gas in India’s energy mix from the current 6 percent to 15 percent by 2030.

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