CCEA approves standardised e-bidding process to make natural gas pricing mechanism transparent

New Delhi [India], October 7 : The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved "natural gas marketing reforms" with the decisions aimed at providing a standard procedure for sale of natural gas in a transparent and competitive manner to discover market price through e-bidding.
Briefing reporters after the cabinet meeting, Union Petroleum and Natural Gas Minister Dharmendra Pradhan said the cabinet has approved a standardised e-bidding process to make natural gas pricing mechanism transparent.
"The government is investing Rs 4,00,000 crores for building gas infrastructure. Our dependency on imported fossil fuels is decreasing. To make natural gas pricing mechanism transparent, the Cabinet today approved a standardised e-bidding process," Pradhan said.
He said Director-General Hydrocarbon (DGH) will suggest a panel of e-bidding platform in front of producers.
"Guidelines will be made for e-bidding. Provisions will be kept to maintain clarity and transparency. Producers will have the choice to choose a platform. The producing company cannot participate in the bidding process as there can be a conflict of interest. If only affiliate companies or a group of affiliate companies of producing companies participate in the bidding then there will be a rebidding," he said.
Pradhan said that the government wants to provide energy to Indian consumers at an affordable price.
"For this, we want to provide energy through various sources like solar, bio-fuels, bio-gas, synthetic gas, and many more," he said.
An official release said that 'Natural Gas Marketing Reforms' was another significant step to move towards gas-based economy.
It said the objective of the policy is to prescribe standard procedure to discover the market price of gas to be sold in the market by gas producers, through a transparent and competitive process, permit affiliates to participate in the bidding process for the sale of gas and allow marketing freedom to certain Field Development Plans (FDPs) where production sharing contracts already provide pricing freedom.
"The policy aims to provide standard procedure for sale of natural gas in a transparent and competitive manner to discover market price by issuing guidelines for sale by the contractor through e-bidding. This will bring uniformity in the bidding process across the various contractual regimes and policies to avoid ambiguity and contribute towards ease of doing business," the release said.
The policy has also permitted affiliate companies to participate in the bidding process in view of the open, transparent and electronic bidding.
"This will facilitate and promote more competition in marketing of gas," the release said. The policy will also grant marketing freedom to the Field Development Plans (FDPs) of those blocks in which production sharing contracts already provide pricing freedom. These reforms will build on a series of transformative reforms rolled out by the Government in last several years," the release said.
It said the reforms in gas sector will further deepen and spur the economic activities.
"The whole eco-system of policies relating to production, infrastructure and marketing of natural gas has been made more transparent with a focus on ease of doing business. These reforms will prove very significant for Atmanirbhar Bharat by encouraging investments in the domestic production of natural gas and reducing import dependence," the release said.
"These reforms will prove to be another milestone in moving towards a gas-based economy by encouraging investments. The increased gas production-consumption will help in the improvement of the environment. These reforms will also help in creating employment opportunities in the gas-consuming sectors including MSMEs. The domestic production will further help in increasing investment in the downstream industries such as city gas distribution and related industries," the release added.
It said the government has taken "transformative reforms in the upstream sector" with a view to making investment easier focusing on ease of doing business.
"The Open Acreage Licensing Policy (OALP) which is investor driven acreage auction process, has increased substantial acreages in the country. No blocks were allocated between 2010 and 2017 which has impacted the long term viability of the domestic production. Since 2017 more than 1.6 lakh sq.km area under 105 exploration blocks have been allocated. This will ensure the sustainability of the domestic production in long run".
The release said that the government brought a series of reforms in the gas sector and as a result investment of more than Rs 70,000 crore is being made in the east coast.
Gas production from the east coast will contribute to Atmanirbhar Bharat by meeting increasing energy needs of the country, the release said.
"In February 2019, Government implemented major reforms in upstream sector and brought a paradigm shift by focusing on production maximization. Acreages under OALP rounds are being allocated based on work programme only in Cat II and Cat III basins. The domestic gas production has complete marketing and pricing freedom. All discoveries and field development plans approved after Feb 28, 2019 have complete market and pricing freedom," the release said.