India’s First Natural Gas Exchange to be Unveiled by March

New Delhi: India’s largest electricity trading platform plans to unveil the nation’s first natural gas exchange by March as it seeks to tap increasing demand for the cleanest fossil fuel.

Indian Energy Exchange started putting together the infrastructure and a team of about 20 officials to run the bourse, Rajesh Mediratta, strategies director at the company, said in an interview in New Delhi. The world’s second most populous nation has been mulling a gas exchange for several years but the move has been reinvigorated by increasing use of the fuel as a global glut damps prices.

Worsening air quality and the nation’s dependence on imported crude oil has also spurred a transition in India’s energy planning. The country seeks to increase the share of natural gas in its energy mix to 15% by 2030 from the current 6%, drawing interest from global majors including Total SA and Exxon Mobil Corp.

The exchange will help bring down the price of natural gas through competitive trade, boosting usage in a country that relies heavily on cheaper coal for its energy needs, Mediratta said.

Still, there are hurdles to overcome. India’s gas market needs uniform trading rules and freedom for consumers to buy the fuel wherever they want. A plan to allocate a certain volume of domestic gas for trading at exchanges is also waiting for government approval. Finally, there is the cost of multiple taxation linked to moving natural gas across state borders, with the Petroleum Ministry calling for one countrywide uniform sales tax system.

“The regulator and the policymakers are working towards streamlining the system,” Mediratta said. “That gives us a lot of comfort.”

Source: Bloomberg

Image Courtesy: FE