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Gas sector crisis: High time to act
Tue, 28 May Pre-Open

The gas sector in India has been hit by troubled times. The prospects of the sector seem limited by structural and regulatory constraints. The gas exploration companies are hardly undertaking any exploration projects because of regulated pricing. Gas distribution companies on the other hand are facing the risk of erosion in their net worth because of some decisions made by the Petroleum Natural Gas and Regulatory Board. Amidst this scenario, the critical sectors like power and fertilizer that mainly rely on natural gas as the input, are suffering.

The domestic supplies are going down and the costlier imported gas has made lot of projects unviable. Considering that the gas is the basic raw material for sectors such as fertilizer and power plants, one might expect the Government to take some quick action. However, it seems to be making little progress in this regard.

Lot of proposals have been considered but with no effective results. These include raising natural gas prices, gas price pooling, priority allocation of gas and so on. With 80% dependence on oil (alternative of natural gas) and shortage of coal, the future of India's energy sector looks dark.

The need of the hour is rationalizing gas prices so that it gives some incentive for domestic companies to explore more gas. This will also attract foreign companies to enter the gas sector and bring with them technological knowhow to make the most of the natural resources in the country. Once the supply issues are taken care of, we expect the prices to automatically be set in the best interests of all. A very clear example of this is the discovery of shale gas in US. Back home, we hope that the Government takes a quick action to address the issue. Energy sector is like the back bone of any economy. We cannot afford delays and lack of action here.

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Feb 19, 2018 (Close)