The Centre is yet to take a call on the regulations under which the Indian Gas Exchange Limited (IGX) would operate. According to officials in the know, clarity is awaited on which body can monitor and regulate the operations of IGX.

The formation of IGX was announced by Indian Energy Exchange Limited (IEX), the country’s largest energy exchange and the parent company. IEX is an automated trading platform for physical delivery of electricity, Renewable Energy Certificates and Energy Saving Certificates. IGX is projected as India’s first automated national level trading platform to promote and sustain an efficient and robust gas market and to foster gas trading in the country.

Policy confusion

“The rules are still unclear about who will be the regulator for this exchange and what terms will dictate its operations. The government in its wisdom may also introduce a levy on the trade to rake in some moolah from the gas trade. All these parameters will surely impact the operations and gains that a player seeks by becoming a member of the gas exchange,” representatives from a medium size oil and gas producer seeking to becoming a seller on the IGX told BusinessLine .

The conversation around starting this exchange had come up after the Petroleum and Natural Gas Regulatory Board (PNGRB) had floated the idea of setting up a Gas Trading Hub/Exchange (GTHE), where natural gas can be traded, and supplied through a market-based mechanism instead of multiple formula driven prices.

This idea was formally expressed in a tender that PNGRB had floated in 2018 for hiring the consultant who was to suggest policy changes for this exchange.

Preparations in full swing

But it is unclear whether the PNGRB is to regulate or oversee the operations of this hub/exchange.

The Ministry of Petroleum and Natural Gas and PNGRB in subsequent statements reiterated the Centre’s commitment to setting up a gas exchange in India. It was expected that price discovered at this exchange will enable policy makers to devise future policy changes that dictate domestic gas pricing.

On its part, IGX has begun accepting members for a fee on its platform and is also holding promotional activities to prep up for a launch.

According to some industry watchers, there is also a strong push to appoint the Central Electricity Regulatory Commission (CERC) as the regulator for this gas market too.

“The absence of any defined regulatory oversight is unusual in India for a sensitive commodity like natural gas. So, policy clarity will be essential to make the gas exchange operations a success,” a potential gas buyer in the ceramic industry said.