Without gas transmission pact with GSPL, IGX’s growth is hit: Mediratta

Kuwar Singh New Delhi | Updated on June 01, 2021

Rajesh Mediratta

Buyers directly deal with GSPL, stay away from the exchange, says official

Lack of access to Gujarat State Petronet’s transmission pipeline network has handicapped Indian Gas Exchange Ltd’s (IGX) growth story, according to a senior official at the exchange.

The platform’s Director Rajesh Mediratta told BusinessLine, that “With a pipeline network of 2,692 km in Gujarat, GSPL is among the three major pipeline entities for gas transportation along with market leader GAIL and Pipeline Infrastructure Ltd. IGX has signed a gas transmission agreement with Pipeline Infrastructure, and signs one with GAIL for every customer. But GSPL has not yet agreed to a GTA.”

“The basic premise of indiscriminate access to transport capacity is not being followed,” he felt. Without a GTA buyers in Gujarat who are directly connected to GSPL’s network have stayed away from the exchange. “If GSPL allowed us to deliver natural gas to their customers, they would not be able to sell at the price that they are currently able to,” Mediratta added.

Also read: IGX adds two more trading hubs

Both GAIL and GSPL operate a transmission network and market gas to buyers. While GAIL has come onboard IGX, picking up a 5 per cent stake in the platform, GSPL has not responded to the offer. The Centre in February had announced that it will set up a transport system operator (TSO) to regulate common carrier capacity in gas pipelines. But the proposal has been delayed as the Petroleum and Natural Gas Regulatory Board, short of a three-member quorum for years now, has been unable to instate any new regulations.

‘Compliance issues’

Among IGX’s five delivery hubs, Dahej in Gujarat is home to nearly 80 per cent of the transactions that take place on the platform, Mediratta said. No transactions have taken place yet on Hazira, another IGX hub in the State, as Shell India has not joined the exchange as a seller.

“Shell requires any buyer of their gas to comply with the UK’s anti-money laundering law and the US’s anti-bribery law. They want a similar compliance for the clients of our exchange. We are trying to work out a solution,” Mediratta said.

Similarly, IGX’s Jaigarh hub in Maharashtra is yet to see any trades. “We expected H-Energy to supply gas there. It is estimated to start by July,” he added.

High international gas prices, a ramp up in auctions of domestic gas, and the second wave of Covid have dampened growth of IGX’s volumes. Over 1 lakh mmbtu of gas was traded on the exchange monthly during March, April, and May, Mediratta said. “We had expected a better ramp up,” he added. After a relaxation in March, international gas prices have risen again to around $10 per mmbtu. The second wave has also hit demand from commercial and industrial customers, Mediratta said.

Published on June 01, 2021

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