Two recent regulatory developments go a long way clearing a few regulatory issues that have been in limbo for the past several years in the Indian gas sector.
Recent amendments to the Petroleum and Natural Gas Regulatory Board Act clear lingering concerns on natural gas tariffs to a great extent. At the same time, the recommendations proposed by Kirit Parikh Committee on natural gas prices present a reasonable, phasing-out direction to gas pricing in the country, which has hitherto seen multiple pricing regimes and arbitrary contractual timelines.
We believe the proposed regulations are designed to:
provide momentum to pipeline transmission infra investments – specifically, long pending pipelines for Gujarat State Petronet Ltd.;
create a relatively more stable pricing regime for the city gas distributions, even if it is at a higher level than historical averages; and
provide enough incentive for higher investments in the gas upstream segment, with the premise of fully deregulated pricing by FY26 and FY27 (depending on the type of field) to accelerate new exploration.