Too early to â€کunbundle' India's gas sector: Ajay Tyagi

Vol 10, PW 22 (08 Mar 07) People & Policy

New entrants to India’s emerging gas market will be disappointed to hear that the oil ministry is opposed to the immediate unbundling of the gas sector.

Lack of focus on unbundling in the proposed gas regulations was a major concern of companies participating at the 21st February meeting (see above). Replying to concerns on this, regulatory board secretary Ajay Tyagi said that unbundling was not possible “immediatelyâ€‌ because the gas sector in India is in a nascent stage.

“It will be a gradual process,â€‌ he said. Tyagi said the regulator would not determine demand, which would be left to market forces and that the regulator is not concerned with PSCs and gas transporters should source gas if they want to bid to lay pipelines.

He said the main purpose of the proposed regulation would be to have maximum capacity pipelines on a common carrier basis with the lowest tariff so that the customer benefits. Tyagi said the regulatory board would like to keep the bare minimum entry criteria to attract competition.

Bidding based on high entry levels, he said, would bar new players. He added that the Board “would not preferâ€‌ gas marketing companies to have JVs with municipalities.

Tyagi asked companies to submit suggestions on the following: Pre-bid conditions on technical criteria. Are these stringent or not Any alternative method to ensure quality and more participants Should the regulations specify maximum pipeline pressure or leave it to the best judgment of the pipeline company Are the regulations discouraging competition