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The panel led by former PNGRB chairman DK Saraf said in its report, Vision 2040 – Natural Gas Infrastructure in India, that the liberalized gas market will increase transparency, boost investment, improve resource allocation and deepen liquidity.
It said a competitive system would remove existing market distortions and attract new players in exploration, pipelines, LNG terminals and city gas distribution.
Natural gas extracted from underground and offshore reservoirs is used to generate electricity, produce fertiliser, convert into CNG to power vehicles, piped to home kitchens for cooking and as a feedstock in many industries. As India moves from fossil fuels to renewable energy, it is seen as a key transition fuel, with its role in the energy mix set to expand.
The government aims to increase the share of natural gas in the country’s energy basket from the current 6.2% to 15% by 2030.
The committee said India’s current pricing structure – government-regulated gas, market-linked domestic production and classification of LNG imports – creates inefficiencies. It identified resale restrictions in regasified LNG (RLNG) contracts, lack of an independent system operator (ISO), limited open access to infrastructure and absence of contract-path transmission tariffs and location-based taxation as major constraints.
Although India is one of the fastest growing gas markets in the world, it still lacks a liquid trading hub for price discovery. The panel said a stronger market would bring the country closer to global hubs such as Henry Hub, NBP and TTF, enable flexible contracting and support better hedging mechanisms.
The panel suggested the creation of a neutral, non-profit ISO to manage pipeline capacity, system balancing, scheduling, and disposal. The proposed ISO will ensure transparent, non-discriminatory access to transmission networks and curb monopolistic practices.
It also proposed an integrated online platform for real-time pipeline capacity booking under PNGRB oversight, as well as a real-time bulletin board integrating SCADA data to publish capacity, flows, maintenance schedules and outages.
To boost liquidity, the committee urged banning resale restrictions and destination clauses in RLNG contracts, allowing buyers to resell gas freely in response to market conditions – bringing India in line with the mature markets of Europe and the US.
For liquefied natural gas (LNG) import terminals, it recommended a transparent third-party access framework, including clear tariffs, rules-based operating procedures, ‘use it or lose it’ provisions and secondary capacity trading on authorized exchanges.
The panel supported a change from route-based to entry-exit gas transportation charges. This structure – common in advanced markets – will allow shippers to book entry and exit capacity independently, simplifying flows into the grid and paving the way for a virtual national gas hub and an eventual Indian gas benchmark.
To strengthen market liquidity, the report calls for greater participation of large consumers such as fertilizer, power, CGD, refinery and petrochemical companies on gas exchanges. It also sought removal of cap on high pressure, high temperature (HP-HT) gas trading, phasing out of administered price mechanism (APM) gas and introduction of a gas release program to sell a part of domestic or LNG supply through exchanges.
The panel recommended aligning the gas and electricity markets by synchronizing gas and electricity days and introducing a day-ahead gas market with four six-hour trading blocks to facilitate flexible bidding.
Highlighting ongoing decarbonization efforts, the Committee proposed a Renewable Gas Certificate (RGC) mechanism for compressed biogas. A regulated, market-based trading system would allow obligated and voluntary entities to meet renewable gas blending targets through tradable certificates.