The Hindu Business Line : Need for regulator in natural gas sector, says study

A STUDY undertaken jointly by the FICCI and GAIL (India) Ltd has emphasised the need for a regulatory framework to ensure transparency and eliminate misuse of monopolistic powers in the natural gas sector.

"The regulator should promote investment in the development of pipeline networks and early establishment of the natural gas grid. Codes for technical and safety parameters as well as inter-connectivity of pipelines are also required to be developed for systematic growth of the sector," says the study.

Currently, there is no single regulatory body for providing the regulatory framework for natural gas wholesale pricing, transmission, distribution, supply and storage. There are no statutory provisions regarding safety since the focus is on self-regulation.

Further, investors should be given exclusivity period in the gas distribution business to enable recovery of investment in the transition phase.

"The regulator's role would be crucial in monitoring the quality of gas supply of the regulated entities to ensure that the best service is available to the customers," the study said.

The increasing globalisation of gas business, recent discoveries, inherent fuel efficiencies, opening up of major gas markets, projected growth in imports in Asia-Pacific, Europe and North America and environmental concerns are transforming the global energy consumption basket with natural gas emerging as the most preferred fuel by 2025.

"In the emerging scenario, the biggest challenge facing gas companies would be marketing to a wide spectrum of customers at varied contractual obligations while sourcing gas at differential terms from various sources," the study noted.

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