Australia is willing to look at a regulatory framework for facilitating supply of gas at lower prices for India’s gas-fired power stations, which may hold the key to the success of Narendra Modi government’s 100 GW (giga watt) solar dream envisaging round-the-clock clean and affordable power to all.
At the third bilateral energy security dialogue in Canberra, Australian resources and energy minister Josh Frydenberg said while the government could not determine the price, a regulatory framework could be worked out to facilitate lower rates through “vertical integration” with power plants.
Frydenberg’s assurance came in response to Goyal’s proposal for adopting a new paradigm for pricing gas in accordance with the changed dynamics of the global hydrocarbons market, devastated by sustained oversupply and crashing price as well as demand.
This marks a major step forward for Modi government’s energy diplomacy. India had in December succeeded in reworking some provisions of a 25-year contract for liquid gas with Qatar’s RasGas in tune with the market reality.
At the energy dialogue too, Goyal was frank to note that Indian consumers have a limited capacity to pay for power, while PM Narendra Modi was committed to 24X7 clean and affordable power supply to all through a 100 GW solar power plan.
Goyal wants to use the existing 24,000 mw of gas-fired plants as spinning reserve for stabilising solar power projects. India could thus, provide a readymade and steady market for Australian gas and safeguard its investments — if the price was right.
Goyal has been flexing India’s market muscle to push his idea for cheap gas. He wants gas producers to work backwards from a tariff of, say, 5 cents per unit of power from a gas-fired plant to arrive at the gas price and fix the rate for 3-4 years.
The dip in oil prices — down 70% since July 2014 — has also pulled down gas prices by a third. Major producers like Australia face troubled times due to a global slowdown.
