Shell chairman stresses urgent need for gas regulator

Vol 6, PW 25 (26 Feb 03) People & Policy

VIKRAM SINGH Mehta, Chairman of the Shell Group of Companies in India, has called on the government to accelerate efforts to introduce a regulator for the Indian gas sector.

Speaking at the PETROMINEX conference in Ahmedabad on 14th February, Mehta painted a gloomy picture for foreign investment in India ifthe privatisation of Hindustan and Bharat Petroleum is derailed. He then vigorously held forth on the domestic gas sector.

"The fundamental issue for gas is demand," said Mehta. "No doubt with the current discoveries of domestic gas and two LNG terminals (Dahej and Hazira) there will be no shortage of gas." But the real challenge is to "restructure the power and fertilisers sectors to create demand." If there is no demand, he pointed out, the gas could not be "monetised." Mehta said the government should take "special steps" to create a market for gas.

Most important: the appointment of a regulator. "There is no regulatory environment yet to defend the interests of the government and the players.

Transportation and storage of gas should be in the hands of an "independent corporate entity with no interest in production and marketing," said Mehta. This independent body should provide everyone with equal access to gas infrastructure.

"The regulatory body should fix tariff on a cost plus basis adjusted for rate of return, location and other factors. Prices should be related to the needs of the market and customers." Mehta ended: "In our quest for energy security we should not lose sight that today's world is so different from the world of the 1960s and 1970s.

We are living in a much more connected world. The days of nationalisation and expropriation are over."