The Petroleum and Natural Gas Regulatory Board (PNGRB) expects the proposed gas trading hub to be functional by the end of the calendar year and Crisil has been appointed to assist the regulator and the government in framing rules for the exchange.
“We have engaged Crisil for advising us in setting up Gas Trading Hub. They will advice us on framing regulations. The time line given to them is 18 weeks from May 11,” Satpal Garg member of the PNGRB said.
Crisil is a global rating and research agency.
“There will many things required form the Government side also. The Government and we, both of us want the gas trading hub to come into existence in the current calendar year 2018 itself,” he said.
Garg was speaking on the sidelines of a roadshow for 9th round of the city gas distribution(CGD) bidding.
According to him the Hub will work in the lines of Power Exchange which determines the price based on supply and demand and market forces.
“This can be a physical or virtual trading hub. It will be an electronic trading hub. The location will depend on where the major pipelines are connected.”
“The major pipelines are currently connected in Gujarat, Maharashtra and Kakinada in Andhra Pradesh. It will be any one of these places,” he said when asked about the probable location for the Hub.
Currently, the central government fixes the price of the bulk of domestically produced natural gas.
The rate, arrived at using price prevalent in gas-surplus nations of US, Canada, UK, and Russia, is USD 3.06 per million British thermal unit for six month period beginning April 1.
In comparison, the cost of imported LNG into India is around USD 7.5.
On the current round of CGD bidding, he said it covers 86geographical locations for selling CNG and piped cooking gas in 174 districts in 22 states and union territories and likely to attract an investment of Rs 70,000 crore.
In addition to Hyderabad, the current bidding covers 20 districts of Telangana, he said.
On the infrastructure part, he said there is about 16,000 km of pipeline existing and operating and another 12,000 km pipeline is under construction.
The PNGRB focusses on increasing the sale of natural gas in the overall energy basket from 6.2 per cent to 15 per cent as mandated by the government, the official added.
Responding to a query, he said the regulator will review the performance of the companies which were awarded contracts in the earlier biddings.
“The PNGRB would review their performances in terms of meeting deadlines and accordingly levy penalty for those who do not meet deadlines,” he said.
