The Ukraine war has exposed the vulnerabilities in India’s gas supply systems. Our demand for natural gas (NG) is around 54.6 billion cubic meter (bcm) of which nearly 50 percent is met from import as liquefied natural gas or LNG. Russia is the world’s second-largest producer of NG with a share of 10 percent. In total world export of gas, its contribution is even higher at 25 percent. Most of Russian gas goes to the European Union (EU) countries with the latter drawing 40 percent of their total NG supplies from the former. On the other hand, India’s gas supply sources are fairly diversified. Most of the imported gas for India comes from countries of middle east viz. Qatar, Oman,...
More
Comments are closed
Category: Oil & Gas
Whether to resurrect LPG subsidy or not
The Govt should focus on reducing price (sans subsidy) by cutting import dependence, fostering competition by involving private entities and bringing it under GST The recent spurt in the price of LPG in the wake of Ukraine crisis has triggered a demand for resurrection of subsidy which the Narendra Modi government had stopped depositing in beneficiary’s accounts since June, 2020. Is the demand justified? By definition, subsidy on purchase of any given product is subvention or financial assistance provided by the state to a certain class of persons who cannot afford to pay the market-based or cost-plus price from their limited income. In case of LPG, the current price of a 14.2 kg cylinder is around Rs 2000 (in Delhi)....
More
Comments are closed
LPG subsidy – to resurrect or not
The recent spurt in the price of LPG (liquefied petroleum gas) in the wake of Ukraine crisis has triggered demand for resurrection of subsidy which Modi – government had stopped depositing in beneficiary’s account since June, 2020. Is the demand justified? By definition, subsidy on purchase of any given product is subvention or financial assistance provided by the state to a certain class of persons who cannot afford to pay the market-based or cost-plus price from their limited income. In case of LPG, the current price of a 14.2 kg cylinder is around Rs 2000/- (in Delhi). Assuming that the person can’t pay more than Rs 600/- the government will give her Rs 1400/- as subsidy so that she is...
More
Comments are closed
The fuel crisis could be a wake-up call
The Government should look for long-term solutions to correct the current situation of heavy reliance on imports and reduce these to 10-15 per cent During 2014-15, Coal India Limited (CIL) — a public sector undertaking (PSU) — had produced 494 million tons (MT). This was a record 32 MT higher than during 2013-14 and higher than a cumulative increase of 31 MT in the previous 4 years. In 2015, this prompted Prime Minister Modi to set a target of 1500MT for 2019-20. Of this, 1000 MT was to come from CIL and remaining 500 MT from private firms. During 2019-20, India produced around 730 MT with CIL contributing 685 MT. Forget the target, the production fell much short of the...
More
Comments are closed
Fuel crisis – a wake-up call
During 2014-15, Coal India Limited (CIL) – a public sector undertaking (PSU) – had produced 494 million tons (MT). This was a record 32 MT higher than during 2013-14 and higher than a cumulative increase of 31 MT in the previous 4 years. In 2015, this prompted Modi to set a target of 1500 MT for 2019-20. Of this, 1000 MT was to come from CIL and remaining 500 MT from private firms. During 2019-20, India produced around 730 MT with CIL contributing 685 MT. Forget the target, the production fell much short of the demand leading to 300 MT import in that year. In 2020-21, domestic output declined to 716 MT courtesy, Covid. During the current year, even as...
More
Comments are closed
Time to reform pricing, subsidy regimes
From October 1, the price of natural gas (NG) on supplies from fields given to Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) on a nomination basis, as well as those given under the New Exploration and Licensing Policy (NELP), has been increased from the current $1.79 per million British thermal units (mBtu) to $2.9 per mBtu – up by $1.1 per mBtu. Going further, the price will rise to $5.93 per mBtu from April 2022 and $7.65 per mBtu from October 2022. Under the NG pricing guidelines in vogue since November 2014, this price – known as the administered price mechanism (APM) — is a weighted average of the price prevailing at four international locations — the...
More
Comments are closed
Self-reliance in gas is the way forward
The objective of gas-based economy is laudable but the existing regime of gas allocation and administered prices has to be dismantled first Delivering the 75th Independence Day address, Prime Minister Narendra Modi set the country a target to achieve self-reliance in energy production through a mix of electric mobility, gas-based economy and making the country a hub for hydrogen production by 2047. Electric mobility and hydrogen are futuristic areas. About gas-based economy, pursuit of this goal will involve increase in gas consumption to meet additional energy needs for sustaining high growth and replacing polluting fuels such as coal. This could result in increased dependence on gas import which is already high at 50 per cent. So, there is need for...
More
Comments are closed
Self – reliance in gas – way forward
Delivering the 75th Independence Day (ID) address on August 15, 2021, Prime Minister, Narendra Modi set the country a target of 2047 – to achieve self-reliance in energy production through a mix of electric mobility, gas-based economy and making the country a hub for hydrogen production. While, electric mobility and hydrogen are futuristic areas, as regards gas-based economy, pursuit of this goal will involve increase in gas consumption to (i) meet additional energy needs for sustaining high growth and (ii) replacing polluting fuels such as coal, fuel oil etc. This could result in further increasing dependence on gas import which is already high at 50%. To prevent this and put India on the path of self-reliance, there is need for a...
More
Comments are closed
Sun-set on LPG subsidy
The overarching focus of the Government should be on giving relief to consumers sans subsidy as that will be in sync with fiscal consolidation From June, 2020, the Union Government stopped depositing LPG subsidy in the accounts of eligible beneficiaries and the position continues till date. Even as the budget for 2021-22 has provided for Rs 14,000 crore under this head (down from Rs 36,000 crore during 2020-21), it is unlikely that any payments will be made during the current year. What has prompted this move? Was it orchestrated earlier but put into effect only now? To understand, let us reflect on some basic facts. Since January 1, 2015, the Modi–government has been running a scheme for direct benefit transfer of LPG....
More
Comments are closed
Sun-set on LPG subsidy
From June, 2020, the Union Government stopped depositing LPG (liquefied petroleum gas) subsidy in the accounts of eligible beneficiaries and the position continues till date. Even as the budget for 2021-22 has provided for Rs 14,000 crore under this head (down from Rs 36,000 crore during 2020-21), it is unlikely that any payments will be made during the current year. What has prompted this move? Was it orchestrated but put into effect only now? To understand, let us reflect on some basic facts. Since January 1, 2015, Modi – Government has been running a scheme for direct benefit transfer (DBT) of LPG. Nicknamed PAHAL (Pratyaksha Hastaantarit Laabh), under it, three major oil marketing PSUs viz. Indian Oil Corporation Limited (IOCL),...
More
Comments are closed