Indian Gas Exchange launches customized contract for fertilizer industry to improve efficiency and trade ease
1 min read 19 May 2023, 09:08 PM ISTOne key feature of the contract is the relaxation in payment terms, with a fortnightly payment cycle.
PremiumNew Delhi: The Indian Gas Exchange (IGX) on Friday introduced a specialized contract tailored to the fertilizer industry, aimed at meeting the unique requirements of the sector and enhancing operational efficiency.
“With this new contract, the sector will witness multiple benefits, such as - more flexibility, reduced overall costs and effective demand management," said a press release.
The newly launched custom contract incorporates inputs from various fertilizer entities, addressing their specific needs. One key feature of the contract is the relaxation in payment terms, with a fortnightly payment cycle. This allows for invoicing on a fortnightly basis, eliminating the need for immediate daily payments. Buyers in the fertilizer sector will now have easier access to gas without the immediate pressure of payment.
Furthermore, the fertilizer industry will be able to purchase gas at zero transaction fees, enabling cost optimization. The new contract also includes a reduced take-or-pay provision, allowing entities to source gas at 80% of the total daily contract quantity for the contract period, compared to the existing contracts‘ 90%. Through IGX, buyers have the flexibility to source gas closest to their delivery requirements.
IGX offers several additional benefits, including flexibility, cost optimization, the ability to manage demand diversity, seasonality, and fluctuations, as well as access to gas from various sources, sellers, and delivery points.
Rajesh Kumar Mediratta, MD & CEO of IGX, said, “We aim to create a well-functioning, liquid, easily accessible, flexible, and market-friendly trading platform for all segments of the industry. The launch of this innovative contract is another step towards benefiting the fertilizer industry, which is the largest consumer of natural gas in India. The new contract offers enhanced flexibility, efficiency, and ease of trading for fertilizer entities, maximizing benefits for the industry. It will also ensure competitive price discovery, reducing procurement costs for these entities."
IGX currently facilitates delivery-based trade in six different contracts, including Day-Ahead, Daily, Weekday, Weekly, Fortnightly, and Monthly, which can be executed for six consecutive months. Gas trade occurs at multiple delivery points, such as Dahej, Hazira, Ankot, Mhaskal, Bhadhbhut, Dabhol, KG Basin, Gadimoga, and Suvali.
The exchange covers six regional gas hubs across India, namely Western Hub, Southern Hub, Eastern Hub, Central Hub, Northern Hub, and North Eastern Hub.
