{"id":223565,"date":"2023-01-23T20:46:44","date_gmt":"2023-01-23T15:16:44","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=223565"},"modified":"2023-02-20T18:44:41","modified_gmt":"2023-02-20T13:14:41","slug":"the-gas-paradox-govt-encouraging-huge-investment-to-push-demand-but-imposing-policies-that-deter-domestic-exploration-and-production","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/the-gas-paradox-govt-encouraging-huge-investment-to-push-demand-but-imposing-policies-that-deter-domestic-exploration-and-production\/","title":{"rendered":"The gas paradox: Govt encouraging huge investment to push demand but imposing policies that deter domestic exploration and production"},"content":{"rendered":"\n

Source<\/strong>: The post is based on an article\u00a0\u201c<\/strong>The gas paradox: Govt encouraging huge investment to push demand but imposing policies that deter domestic exploration and production<\/strong>\u201d published in Business Standard<\/strong> on\u00a023rd<\/sup> January 2023<\/strong>.<\/p>\n

Syllabus: GS 3 \u2013 <\/strong>Economic Development<\/strong><\/p>\n

Relevance: <\/strong>import dependency of India on oil and gas<\/strong><\/p>\n

News<\/strong>: The article discusses the policies adopted by the government which makes India import dependent on natural gas.<\/p>\n

What is the current situation of India in natural gas?<\/strong><\/h2>\n

The government encouraged investments of over Rs 2 trillion in natural gas infrastructure and offered subsidies under the PM Ujwala Yojana (PMUY)<\/strong> to expand access to cleaner burning fuels, CNG and LPG.<\/p>\n

However, the government has also come up with policies that have held back the development of domestic oil and gas resulting in lower domestic production.<\/p>\n

This makes India rely on gas imports with volatile global fuel rates.<\/p>\n

The growth rate of domestic natural gas is too weak to match the rising demand in India.<\/p>\n

Moreover, the government has come up with new guidelines<\/strong> which has affected the oil and gas companies.<\/p>\n

What are the new guidelines for natural gas given by India?<\/strong><\/h2>\n

The new guidelines have capped the trading margins on resale of gas<\/strong> and provided complex conditions<\/strong> on prioritising sales to households and transport sectors in the case of similar bids at e-auctions.<\/p>\n

It also requires a huge amount of paperwork<\/strong> that gas producers must produce before officials. This policy change was announced without any warnings.<\/p>\n

This has made Reliance Industries and BP to postpone an auction in which it decided to sell 6 million cubic metres (mcm) a day of gas to Indian consumers at half the rates of international liquefied natural gas (LNG).<\/p>\n

What has been the trend in consumption and import of natural gas?<\/strong><\/h2>\n

Overall consumption of natural gas rose 22 percent<\/strong> between 2015-16 but the growth rate of LNG imports surged 58 percent<\/strong> a day during this period.<\/p>\n

This led to imports growing at 53 per cent in 2019-20 from 41 percent in 2015-16<\/strong> because domestic production failed to catch up with demand.<\/p>\n

The dependency on overseas suppliers for cooking gas rose to 62 per cent from 47 per cent in 2017-18, <\/strong>after which the government decided to offer subsidised connections under PMUY.<\/p>\n

This import dependency will also affect India to reach the target of 15 percent natural gas in the energy mix by 2030<\/strong> which currently stands at 6 per cent.<\/p>\n

Moreover, natural gas demand from the city gas distribution sector for domestic cooking fuel and transport is expected to grow 15-17 per cent over fiscal 2022-2027.<\/p>\n

Therefore, this rapid growth in city gas use will make India more dependent on foreign fuel due to limited domestic production.<\/p>\n

Moreover, there were also changes made by the current government in capping the price of gas but none was successful.<\/p>\n

What changes were made by the government?<\/strong><\/h2>\n

In 2014, the Rangarajan Committee\u2019s gas pricing formula<\/strong> was diluted by removing LNG prices as a benchmark to calculate domestic gas rates.<\/p>\n

It then capped the price of gas produced from unconventional areas, including deep waters.<\/p>\n

However, when these measures did not work, it constituted a committee last year led by former Planning Commission member Kirit Parikh<\/strong>.<\/p>\n

It recommended a price cap on domestic supplies that is around 20 per cent lower than current levels which will come effect from April this year.<\/p>\n

What is the way forward for India?<\/strong><\/h2>\n

Policies such as interfering with fuel prices, arbitrarily capping margins of traders, constantly disturbing with gas pricing formulae, and pursuing pointless arbitrations have discouraged foreign explorers from coming to India<\/strong>.<\/p>\n

Therefore, India needs to adopt such policies which build a trust of foreign companies in India<\/strong> and make India more dependent on domestic production.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on an article\u00a0\u201cThe gas paradox: Govt encouraging huge investment to push demand but imposing policies that deter domestic exploration and production\u201d published in Business Standard on\u00a023rd January 2023. Syllabus: GS 3 \u2013 Economic Development Relevance: import dependency of India on oil and gas News: The article discusses the policies adopted… Continue reading The gas paradox: Govt encouraging huge investment to push demand but imposing policies that deter domestic exploration and production<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,216],"class_list":["post-223565","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-3","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/223565","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=223565"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/223565\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=223565"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=223565"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=223565"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}