Hefty membership of Rs80.5 lakh to join exchange

Vol 8, PW 6 (16 Jun 04) People & Policy

Gujarats new gas trading exchange will benefit natural gas suppliers like ONGC, British Gas, Cairn Energy, Hindustan Oil Exploration Company, Niko Resources, Gujarat Petroleum and users in the power, fertiliser and gas transportation industries.

Gujarat Petronet will have an exclusive arrangement with NCDEX and all its customers will be given separate membership of the bourse. We plan to offer a 100% margin for the buying side positions, a Gujarat Petronet source tells us.

The contracts will be inclusive of royalty and sales tax. According to the NCDEX presentation, Gujarat Petronets customers and suppliers will have access to the NCDEX trading system through the Internet.

The contracts will be on a seven day rolling basis. Explaining the trading rules, the source said the base price of the contract would be based on polling.

But the closing price will be determined by the weighted average of all the trades done on that particular day. This closing price will serve as the base price for the next days trading.

For a new contract, the previous days contract closing price will be taken as a base price. A bank guarantee from participating companies will be required.

Membership fees will be a total of Rs80.5 lakh. Of this, Rs15 lakh will be as an interest free cash deposit; Rs15 lakh will be in the form of collateral security; Rs50, 000 as the advance minimum transaction charges; and Rs50 lakh as net worth requirement.

On default, the exchange clearly states that, failure of physical delivery will be treated as default by the seller. Penalties will be imposed at a 10% rate of the highest traded price of the contract and 20% margin collected will be used for payment.

Parameters of future gas contracts for Gujarat gas trading exchange Unit of contract 100 million kcal (approximately Rs80, 000) Contract duration Seven days Price quote Rs () per million kcal Delivery period One day Trade timings 10am 11am and 3pm 4pm Technical Parameters Gas quality 8,350 kcal/ standard cubic metre Inlet Up to 90 kg/square cm Grid pressure 50-70 bar Delivery gas pressure 20kg/square cm (minimum) Physical Delivery and Settlement GSPL will deliver gas to the buyer on E+2 (expiry + 2 days) based on the net positions submitted by NCDEX on E+1. Confirmation of actual physical deliveries is sent by GSPL to the exchange on E+3.

The exchange will then transfer funds to the sellers account on E+4.