Three new natural gas marketing reforms introduced by Union Cabinet to reduce dependence on imports

• The Union Cabinet has brought in three new reforms to how the bidding process for natural gas will take place across India.
• The Director General of Hydrocarbons (DGH) will suggest a new e-bidding platform to gas producing companies for use.
• Even though gas producing companies themselves will not be allowed to participate in the bidding process, affiliate companies can still issue a bid.

The Indian government’s Union Cabinet has approved three new natural gas marketing reforms to give a boost to the gas economy and reduce import dependence.

This includes setting up a new e-bidding platform, prohibiting producing companies from participating in the bidding process and bringing all different fiscal models under the new bidding mechanism.

“India currently produces 84 million standard cubic meters (MMSCM) of natural gas and imports around the same amount. With the new reforms, 40 MMSCM will come into local production. Country’s dependency on import of natural gas will reduce,” said Union Minister Dharmendra Pradhan while introducing the new reforms.

A new bidding process to promote pricing and marketing freedom for natural gas
Last year, the Indian government declared that any new discoveries and any gas found within those regions will get pricing and marketing freedom. But, according to Pradhan, there was a bottleneck in how to implement the system.

“We have to move the country towards clean energy. Have to increase gas consumption. The government has already allocated around ₹4 lakh crore to build up gas infrastructure across the country,” he said..

Now, the Director General of Hydrocarbon (DGH) will suggest an e-bidding platform to producers. It will list all government entities and other credible companies. The DGH will also issue guidelines for the same.

“Producers will have a choice between different platforms in a transparent public domain akin to how coal, spectrum and mineral auctions take place in the country,” said Pradhan.

While producing companies themselves will not be allowed to participate in the bidding process, all other players and affiliate companies will be allowed to bid.

In order to standardise the new system, any segmented public sector enterprise (PSE) and fiscal models will also be governed by the new bidding mechanism and any affiliate bidding mechanisms, explained Pradhan.

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