Gas plan caught in regulatory minefield

New Delhi's ambitious targets to clean its air by decarbonising energy sector will be underpinned by its success in building nascent natural gas segment

- S DINAKAR

If India is serious about more than doubling the share of natural gas in the country's energy mix by 2030, justifying the billions of dollars of investments being made by the state in a national gas grid, and charting a path towards less polluting fuels, then it needs to review recent actions that threaten to shackle the gas industry and impact energy security.

New Delhi's ambitious targets to clean its air by decarbonising its energy sector will be underpinned by its success in building its nascent natural gas segment rarely has any large nation directly made the leap from coal to renewables. The road to net zero passes through the gas grids.

However, less than 6 per cent of India's energy mix comes from gas, and a majority from coal - in contrast to over 35 per cent for gas in the US energy mix and 20 per cent in China.

Given the long road ahead, one would expect the government to expand reforms to bring transparency to the gas market. But, on the contrary, since the pandemic, New Delhi has increased its oversight of the gas business, either directly or via regulation.

The pushback against market reforms began in early 2023 after global gas rates rose, prompting New Delhi to cap domestic prices, hurting investor interest in upstream - the closing date for bids for India's ninth petroleum bidding round has been postponed repeatedly, the latest to August, due to lack of interest, industry officials said. Regulatory actions this year have transmitted conflicting signals to investors in city gas pipelines and LNG import terminals.