Minister of Petroleum and Natural Gas & Steel, Dharmendra Pradhan has asserted that the country was all set to emerge as one of the primary drivers of growth in gas demand in Asia, despite the pressing COVID-19 challenges. He said that this would be achieved through a combination of government’s pursuit of consistent policies and initiatives, as well as fast-developing pipeline infrastructure.
Pradhan added that to give a fillip to the gas-based economy, focus was being put on enhancing domestic gas production, expeditious development of gas infrastructure as well as the development of the gas market by providing open access to gas infrastructure.
Pradhan was speaking at the International Energy Agency (IEA) and Ministry of Petroleum and Natural Gas joint webinar on ‘Building a Natural Gas Based Economy in India Amidst a Changing Global Gas Market Landscape’ on Wednesday. The workshop, which was inaugurated in the presence of the minister and Executive Director of IEA, Dr. Fatih Birol, brought together international experts on the gas sector and relevant stakeholders across the Indian energy ecosystem.
On the creation of the free gas market, the minister said that the government was progressively moving towards a marketing and pricing freedom regime in the country. The gas grid was being expanded to new markets in the eastern and northeastern parts of the country with the government’s supports of capital grants for Pradhan Mantri Urja Ganga (PMUG) and Indradhanush North Eastern Gas Grid projects. The coverage of City Gas projects was being expanded to 232 geographical areas (GAs) spread over more than 400 districts, with the potential to cover about 53 per cent of the country’s geography and 70 per cent of the country’s population.
The minister said that to further facilitate a conducive business environment for competitive gas markets, efforts were underway to rationalise gas pipeline tariff structure for improving the affordability of gas across the country and for attracting investments into gas infrastructure. The present zonal tariff structure for the gas pipelines resulted in additive tariffs for the usage of multiple pipelines to transport natural gas from the distant gas supply sources. It caused a wide disparity in pipeline tariffs particularly for the buyers located distant from the gas sources and thus hindered the development of new gas markets and demand centres in far-flung and remote areas.
Pradhan said that to create a level playing field among gas consumers located in far or remote areas, the existing zonal tariff structure was currently being reviewed to make it rational and competitive. The new tariff structure would facilitate in creating a single gas market by attracting investment to complete the gas grid as well as ensuring equitable access to natural gas across the country. Gas-based industries would benefit from the new tariff structure, which would improve gas affordability across the country.
Further, a simplified tariff structure would also encourage gas industries to utilise the opportunity of procuring their gas requirement through gas trading exchange platforms based on the market mechanism. A level playing field among industries would promote in minimising their input cost and improve competitiveness in the global production chain. Apart from industries, new rationalised tariff structure would also give a boost for expeditious development of city gas distribution (CGD) projects, and piped natural gas (PNG) and compressed natural gas (CNG) services to the citizens.
IEA Commends India
In his remarks, Dr. Birol lauded the efforts of Govt of India in providing energy access and energy availability to citizens and said that on a long-term basis, India would be at a centre stage of all global energy players. He further said that the country had set a very ambitious target of increasing the share of natural gas from 6 per cent to 15 per cent by 2030 in its energy mix and was on the road to achieving the target through market reforms, infrastructure enhancement and capacity building.
India and IEA have been cooperating across a range of areas, including oil security, energy efficiency, statistics and technology since India became an associate country of IEA in March 2017. The workshop is the first collaborative activity between the IEA and the Ministry of Petroleum and Natural Gas in the realm of a gas-based economy. The genesis of this collaboration can be linked to the launch of the first in-depth review of India’s energy policies by IEA in January 2020, wherein IEA had lauded Government of India’s efforts to increase the share of gas in India’s energy mix and provided recommendations to support the government’s goals of promoting well-functioning energy markets.
The collaboration of India and IEA in the natural gas sector are intended to develop relevant knowledge sharing and experiences on a range of issues including natural gas infrastructure, regulation and gas hub development to help facilitate India’s national efforts to increase the share of natural gas in the energy mix and strengthen energy security.