The following are some of the issues that need to be addressed in order to ensure the expeditious development of the gas sector of India, as revealed by a study of the gas potential of the country. - The recent policy of the government on gas price revision would help gas sector development in India. However, the next logical step in reforms is a gas pricing mechanism along the lines of those prevalent in Europe and the USA.
- Liberal fiscal policies are required for developing gas infrastructure for transportation and distribution. Gas transportation pipelines and LNG regasification terminals also need to qualify for the fiscal benefits similar to those provided to Mega power projects.
- Exploration for all hydrocarbons under NELP was originally accorded a tax holiday. However, now it has been clarified that only oil discoveries would be allowed tax exemption, a position reversed during the 2009 budget, wherein all gas blocks under NELP-8 were also provided with a tax holiday. A number of blocks awarded under NELP rounds 1-7 may be relinquished if gas is found, as the operators may find these blocks to be non-viable in the absence of tax sops.
- Coal bed methane exploration is yet to be allowed tax holidays, even though coal bed methane is also a natural gas.
- Declared goods status has been bestowed on oil and coal, but the gas/LNG industry is yet to obtain this categorization, despite repeated appeals over the the last 10 years.
- Cold energy utilization should be encouraged for power plants, a move that can provide 6-8% efficiency gains at LNG-based power plants.
- Pooling of gas prices should be implemented to bring uniformity to gas supply prices.
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