Power minister Geete wants 'ceiling price' on LNG

Vol 7, PW 7 (18 Jun 03) People & Policy

LETS HOPE that power minister Anant Geete is kept well away from the 'Integrated LNG Policy' when it is finally drafted.

Because if this politician from Maharashtra succeeds, there will be a ceiling price on all LNG imported into India! In a May letter to oil minister Ram Naik - seen by this report - Geete argues that India's domestic gas sector is "immature" and that the normal rules of supply and demand should not be allowed to fix the price of regassified LNG. Geete says "appropriate regulation is absolutely necessary." His most startling recommendation and one that would make any potential LNG importer abandon India immediately if implemented - is that any new gas regulator should have the power to fix a ceiling for the cost of imported LNG! Equally worrying is his recommendation of draconian regulatory powers over the sector.

For instance, that regulation should cover all aspects of the LNG business after the LNG purchase contract is signed; that the regulator should have the power to decide the location of LNG terminals and finally, that the regulator should have the power to audit the costs of regassification, distribution and LNG marketing. "I hope you would agree that these are very important recommendations and they must form part of the 'Integrated LNG Policy'," writes Geete to Naik.

Geete tells Naik his views reflect those already set out by the government's 'Committee of Secretaries' as far back as October 2000. Luckily, Geete is not for indefinite tight control of the domestic gas and LNG business.

"After the market matures, the role of regulation in terms of pricing would gradually reduce and market forces will take over, providing competitive advantage to customers at large." But who decides when the market has matured Anant Geete