PNGRB Expert Panel Urges Competitive, Open-Access Gas Market
India’s present pricing framework an assortment of government-regulated gas, market-linked domestic production and LNG imports creates inefficiencies, the committee noted
New Delhi: A high-level expert panel set up by the oil regulator Petroleum and Natural Gas Regulatory Board (PNGRB) has called for sweeping structural reforms to create a free, competitive natural gas market in India, arguing that market-driven pricing and open access are essential for the country's clean energy transition. The government, however, aims to raise the share of natural gas in the country’s energy basket to 15 per cent by 2030, up from the current 6.2 per cent.
In its report titled as ‘Vision 2040 - Natural Gas Infrastructure in India’, the panel led by former PNGRB chairperson D K Sarraf said a liberalised gas market would enhance transparency, spur investment, improve resource allocation and deepen liquidity. “A competitive system would remove current market distortions and attract new players across exploration, pipelines, LNG terminals and city gas distribution,” the report said.
Natural gas, extracted from underground and offshore reservoirs, is used to generate power, produce fertiliser, turned into CNG to power vehicles, piped to household kitchens for cooking and serve as feedstock across several industries. Seen as a key transition fuel as India shifts from fossil fuels to renewables, its role in the energy mix is set to expand.
India’s present pricing framework an assortment of government-regulated gas, market-linked domestic production and LNG imports creates inefficiencies, the committee noted. It flagged resale restrictions in regasified LNG (RLNG) contracts, lack of an Independent System Operator (ISO), limited open access to infrastructure, and the absence of contract-path transmission tariffs and location-based taxation as major hurdles.
Although India is among the world’s fastest-growing gas markets, it still lacks a liquid trading hub for price discovery. “A robust 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 said.
The panel further suggested that there should be the creation of a neutral, not-for-profit ISO to manage pipeline capacity, system balancing, scheduling and settlements. The proposed ISO would ensure transparent, non-discriminatory access to the transmission network and curb monopolistic practices.
To boost liquidity, the committee also urged a ban on resale restrictions and destination clauses in RLNG contracts, allowing buyers to freely resell gas in response to market conditions - bringing India in line with mature markets in Europe and the US. “For LNG import terminals, a transparent third-party access framework, including clear tariffs, rule-based operating procedures, 'use-it-or-lose-it' provisions and secondary capacity trading on authorised exchanges,” it suggested.
