The first meeting of the Inter-Ministerial Committee under the chairmanship of Saumitra Chaudhury on pooling of gas prices witnessed a range of views on the subject from participants.
- Chaudhury himself was of the view that a pool price mechanism should stay in place for a reasonable period of time, ranging from anywhere between 5 and 15 years. This is because investors are wary of setting up large gas based projects on account of uncertainty in the pricing of gas because of the existence of a plethora of domestic prices and high price volatility of imported LNG, both on long term and spot basis. He said that there was a requirement for price certainty at least in the medium term.
- Chaudhury's view was supported by A.K. Balyan, Managing director Petronet LNG Ltd, who said that power and fertilizer sectors had shied away from tying up LNG for the long term on account of price volatility. While countries like Korea and Japan purchase LNG on a large scale for consumption by industry, Indian consumers hesitate to do so. He was of the opinion that a medium term pooling policy was the only way out.
- The other big supporter of the pooling mechanism was GAIL chairman B.C. Tripathi. He said that his company had been unable to increase the market substantially for natural gas due to the number of prices prevailing in the country at present for both imported and domestic gas. A pooling mechanism would help under the circumstances.
- Petroleum ministry representatives strongly supported the pooling concept, claiming that incremental gas supply capacity can only be built if there is certainty and uniformity in pricing of gas.