Issues and Challenges in Development of Efficient Gas Market

Abstract

India needs energy, which its population can access and afford. Government of India intends to increase energy availability by increasing the share of gas, in the energy mix from 7.1 to 20% by the year 2030. However, this is not possible unless there is a thriving gas market in the country. The current Indian gas market has distortions such as monopoly power, inadequate infrastructure, and lack of transparency. Gas market evolution curve helps understand various phases of gas market, starting from government controlling the gas chain, negotiated market, early wholesale and fully developed gas market. Study of major countries reveals India at negotiated market phase, with aspirations similar to other countries, to move to a fully developed market phase such as the USA and UK. The learning from USA and UK can help to understand factors for such a transition; however, this can only be achieved if challenges such as issue relating to large population below poverty line, lack of integrated planning, continued distortion in all energy markets, unstable fiscal regime, and misalignment between federal and state governments are addressed. Government needs to calibrate its approach to develop gas market in order to increase the share of gas in the energy mix.