IEA Recommends Gas Market Reforms

On 12th February 2024, the International Energy Agency (IEA) called for natural gas pricing freedom and the unbundling of marketing and transportation businesses to expand gas usage in India.

Key Points

Projected Growth: India’s gas consumption is expected to rise by 60% to 103 billion cubic metres (bcm) annually by 2030.
Gas Pricing Freedom: IEA recommends gradually extending full pricing freedom to all fields, as suggested by the Kirit Parekh Committee in 2022, to stimulate investments and long-term availability.
Unbundling of Gas Market: The separation of supply and transmission operations and establishing independent gas transmission system operators (TSOs) would enhance competition and infrastructure utilization.
Infrastructure Expansion: Since 2019, India has quadrupled its CNG stations, doubled residential gas connections, and expanded its pipeline network by 40%. By 2030, these numbers are expected to grow significantly.
Industrial Demand & LNG Imports: Heavy industry and manufacturing will drive gas demand, while domestic production will rise modestly. LNG imports will need to more than double to meet demand.
Strategic Policy Measures: Adjusting the tax structure for gas vehicles, rationalizing GST on CNG, and securing long-term LNG contracts are crucial to sustaining growth.