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The Petroleum and Natural Gas Regulatory Board (PNGRB) has amended regulations related to pipeline tariff, authorizations and capacity as it moves towards a unified tariff regime from FY24, and to accelerate the laying of pipelines and supporting infrastructure.
“These amendments will serve as a springboard for the implementation of the Single Tariff Regulations which will come into force from April 1, 2023. To resolve the implementation issues of the Single Tariff, an industry committee has been constituted,” the PNGRB said in a statement.
The regulator emphasized that the changes aim to improve the availability of natural gas in remote areas at competitive and affordable prices with the goal of one nation, one network and one tariff.
ICICI Securities said, “The regulatory process, stalled for the last two years due to lack of adequate quorum, has been restarted. In addition, these measures are also intended to encourage faster capacity expansion and completion of pending expansion projects by removing some disincentives.”
Key risks include a delay in the final tariff order, a prolonged decline in gas demand and delays in the execution of new pipelines.
Amendments
“In order to simplify the application of the unified tariff, an integrated tariff for the gas pipeline at the entity level was introduced into the aforementioned regulations, which will serve as the basis of a unified tariff at the national level. “To protect the general interest of consumers in different regions, the number of unified tariff zones has been increased from two to three,” PNGRB said.
Key changes include the introduction of more relaxed capacity increases, exemption of new capacity from tariff calculation for five years, use of system gas (SUG) is now allowed in costs to the extent of about 0.1 percent of volume, application of new tax rates prospectively rather than retrospectively and annually adjusting tariffs as needed.
Consumption of natural gas
Natural gas demand in India has grown every year since 2015, except for a 1 percent decrease in 2020, to reach 2.3 trillion cubic feet (Tcf) in 2021, according to the US EIA.
India, the world’s fourth-largest LNG importer last year, imported about 1.2 Tcf of LNG, accounting for 7 percent of global trade. Qatar was the primary source of imports with a 42 percent share, followed by the USA (16 percent) and the UAE (13 percent). In 2022, India’s total regasification capacity was 1.9 Tcf with a utilization rate of 58 percent, it added.
During the April-October period of FY23, India’s natural gas production rose marginally by 1 percent year-on-year to 19,600 million standard cubic meters (MSCM), while imports fell 11 percent year-on-year to 16,876 MSCM. Gas available for sale during October was 4,789 MSCM — down about 2 percent from the same period last year. Total consumption on a provisional basis was 4,702 MSCM.
The biggest consumers were fertilizer (37 percent), CGD (20 percent), electricity (13 percent), refinery (5 percent) and petrochemicals (2 percent).
Natural gas infra
About half of the country’s gas demand comes from KG-D6, Mumbai Offshore, Cambay Basin, Ravva Sea, KG Basin, Cauvery Basin, while the rest is imported as Liquefied Natural Gas (LNG).
Currently, natural gas is supplied across the country through three main pipelines by Gas Authority of India (GAIL), Reliance Gas Transportation Infrastructure (RGTIL)/ Reliance Gas Pipelines (RGPL) and Gujarat State Petronet (GSPL).
GAIL manages about 11,411 km of trunk pipelines, which constitutes 70 percent of the network in the country. RGTIL and RGPL operate 1,784 km of pipelines which constitute about 11 percent of the pan-India network and GSPL has about 2,692 km of pipelines which constitute 16 percent of the network.
Posted on November 25, 2022
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