India’s much-awaited gas exchange to debut in the next 12 months

New Delhi: The government's major gas-pricing reform, a gas exchange, which has been in the pipeline for quite a while now, is expected to be launched in the next 12 months, a top bureaucrat in the Ministry of Petroleum & Natural Gas who looks after natural gas said on Tuesday. Speaking at the India Energy Forum 2019, Joint Secretary in the Petroleum Ministry, Ashish Chatterjee, said, "The next 12 months will see laying down of more LNG pipelines, strengthening of the city gas distribution (CGD) network, inclusion of natural gas within the GST regime and the launch of India's very own gas exchange."

What is a gas exchange?

The oil ministry is looking to allow trading of all gas produced in the country on the proposed exchange and allow the prices to be determined locally. The exchange will be a parallel platform for local price discovery of domestic gas. Currently, the domestic gas price is the weighted average price of four global benchmarks — the US-based Henry Hub, Canada-based Alberta gas, the UK-based NBP, and Russian gas.

The domestic price is based on the benchmark prices in the prior year and kicks in with a quarter's lag. It applies for six months.

Gas economy to see investment of $60 billion in next few years

While stressing that the government is focussed on making clean energy accessible and affordable, Chatterjee said that a lot of thrust has been placed on expanding the existing pipeline network and strengthening the CGD network.

"India is the third-largest and the fastest-growing consumer of gas. The government is working to expand the trunk pipeline network and has placed major thrust on CGD networks. From 116 districts, the CGD pipeline has already been expanded to 406 districts. So far, we had LNG pipelines on the western coast of India, and now, we are taking the network to the eastern coast too. Broadly speaking an investment of $60-odd billion in the midstream and downstream gas is coming up in the next few years," said the Secretary.

'Govt to let market, demand decide India's energy mix'

In what came as another assurance from the government for the auto industry which has been opposing a 100 percent transition to electric mobility, the Secretary categorically said that India's energy needs will be met by a variety of sources and will be decided by the market. "In the coming years, EVs will cater to about 30 percent of the market. And the rest will be catered to by alternative sources. And we need to give consumers a variety of alternatives," he said.

"We have an opportunity for a variety of fuels to grow together and meet the demand. And we should leave it to the market," Chatterjee asserted.