The government is working on ‘unbundling’ of marketing and transportation of gas in the country, Oil Minister Dharmendra Pradhan has said, in a move that would end up splitting Gail, the owner of most of nation’s natural gas transportation network.
India is aiming to build a gas-based economy, and beefing up policy frameworks and gas infrastructure for that.
The government is hoping to raise the share of natural gas in the country’s energy mix to 15 percent by 2030 from current 6 percent.
It is also planning to double its gas pipeline network and gas import terminal capacity over the next few years.
State-run Gail is the biggest gas marketer and transporter in the country and has a few anti-trust cases pending against it.
‘The ownership of both transportation and marketing network by an entity leads to conflict of interest. This is not in the interest of consumers or suppliers. Which is why unbundling is needed,” said DK Sarraf, the chairman of Petroleum and Natural Gas Regulatory Board (PNGRB), which is preparing a plan to tweak regulations that can help enhance open access to gas pipelines.
“Setting up of a gas trading hub would be the trigger for open access as well as unbundling,” said Sarraf.
The government is hoping to set up natural gas trading hub by year-end, which will help with market discovery of prices in the domestic market for locally produced gas as well as the imports.
Gas hub can be effective only if all players have equal access to import terminals as well as pipelines. A well-functioning gas hub can ultimately end price control in the country where domestic gas prices are decided every six month on a government-set formula.
