Selling gas in a de-regulated market

Vol 5, PW 12 (01 Aug 01) People & Policy

Anyone planning to sell gas in a de-regulated market will be glad to hear ministry mandarins are applying their collective mind to another key issue: gas pricing, and the potential differential between domestic gas and imported gas by pipeline or LNG.

"It is important to set up a framework for consumer- end pricing considering both for domestic gas as well as imported gas," we learn. "The duality in gas pricing could create marketing problems as the competitive forces would create a limitation for such pricing system.

Gas prices may vary inter-sector, but intra-sector the pricing would need uniformity as the price differential might not be accepted by the market." What's the solution for this " inability" of the market to accept different prices "A proper balance of fuels in the overall energy mix rather than the preferential penetration of any particular fuel." Who constitutes the market Primarily the power, fertiliser and sponge iron sector. Today they are "allocated" gas by the Gas Linkage Committee under a bizarre system that allows the "allocation" of more gas than is produced.

This year for example, a ministry paper readily admits that the Gas Linkage Committee "allocated" a total 119m cm/d to the market but that only 64m cm/d will be supplied and remarks matter of factly that: "Indian gas supply market is supply constrained."