India notifies way for market-based gas price discovery1 min read . Updated: 22 Dec 2020, 11:31 PM IST
A contractor shall engage one of the five independent agencies who have been empanelled for a period of 3 years
NEW DELHI : The government has unveiled the template for market-based price discovery of gas and empanelled SBI Capital Markets Ltd, MSTC Ltd, Crisil Risk and Infrastructure Solution Ltd, RITES Ltd, and mjunction Services Ltd to carry out price discovery auctions through an electronic platform.
A contractor shall engage one of these five independent agencies who have been empanelled for an initial period of three years, according to a 3 December notification by the petroleum and natural gas ministry on market price discovery for domestically-produced natural gas. “The contractor shall design the tender/ bid offer, including eligibility criteria, bid parameters, evaluation criteria, tender fee, salient terms and condition of gas sales agreement and any other relevant information, with a view to encourage wider participation from prospective buyers, promote competition and maximize the value of natural gas offered," as per the notification.
This standardized e-bidding mechanism has been formulated by the directorate general of hydrocarbons (DGH) after the Cabinet Committee on Economic Affairs (CCEA) in October approved the formulation of a standard procedure for market price discovery of gas across various contractual regimes.
“On completion of the bidding, the contractor shall submit a bid closure report to DGH with details such as list of participants, qualified bidders, selected bidders with their prices and quantity allocated. Further, a copy of all the gas sales agreements (GSAs) executed between the contractor and buyers shall be submitted to DGH," the notification said.
The move is likely to attract investors and help India’s push for a gas-based economy, with the Centre’s plan to boost domestic gas production by 40 million standard cubic meters a day (mmscmd), from the current 80 mmscmd. “The entire proceeding will be conducted by the contractor/producer without any need for approval of the government. The government, however, will have the right to ask for information and intervene if there are reasons to believe that there is foul play," the notification said.