IEA Projects 60% Rise In Gas Consumption in India; Suggests Liberalized Gas Pricing Regime

New Delhi, Feb 12 (KNN) The International Energy Agency (IEA) has recommended that India implement full pricing freedom for natural gas and unbundle its gas marketing and transportation businesses to enhance the fuel’s role in the economy.

In its "India Gas Market Report: Outlook to 2030," released at the India Energy Week, the IEA projected a 60 per cent increase in gas consumption, reaching 103 billion cubic meters annually by the decade’s end.

As India aims to boost the share of natural gas in its energy mix from just over 6 per cent to 15 per cent by 2030, the IEA suggests key policy reforms, including a phased transition to pricing freedom.

Currently, government-imposed price caps on gas from legacy fields and high-cost deep-sea fields hinder market efficiency.

The agency emphasises that easing global gas market conditions in the latter half of the decade provide an opportunity for full pricing deregulation, encouraging upstream investment and long-term availability.

Additionally, the IEA advocates for the unbundling of gas supply and transmission operations. Presently, state-run GAIL dominates both sectors, creating potential conflicts of interest.

Establishing independent gas transmission system operators (TSOs) could enhance market competition, improve infrastructure utilization, and support greater gas adoption.

India’s gas market is experiencing a turning point, with demand surging over 10 per cent in both 2023 and 2024. The country has expanded its CNG station network and household gas connections, with plans for further growth by 2030.

The city gas distribution sector is expected to lead demand, followed by heavy industry and oil refining.

With limited domestic gas production growth, India’s LNG imports will need to double to 65 bcm annually by 2030.

Strategic long-term contracts are crucial to avoid spot market volatility and secure future energy needs, the report warns.

(KNN Bureau)