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Presented at International Conference on Reviewing the Global Experience with Economic Regulations, organized by CUTS By S K Sarkar April 18-20, 2011
Presentation outline
Sector overview/trends Policy initiatives and impact Competitive assessment framework Recommendations/conclusions
Sector trends[1]
Projected gas demands by 2030 vary: 119 bcm to 405 bcm 2009-10, production at 47.57 bcm, of which private sector about 50% 2011-12 Gas imports (LNG) expected at 52.5 mscmd
Sector trends[3[
Proven gas reserves at 1120 bcm (2009) Shale gas at nascent stage of development due to various impediments such as technological challenges, lack of policies for shale gas exploitation Prognostic CBM resources estimated at about 4.6 tcm Fiscal scheme does not permit swapping of domestic gas with LNG gas ( not treated as declared goods, varying local sales tax/vat) Gas market development needs host of measures in upstream as well downstream segments
Key recommendations/conclusion[1]
Non discriminatory open access: need to have redressal mechanism (like in electricity sector), Affiliate code of conduct : need to revisit for having adequate compliance plans and monitoring mechanisms , Market power increases if open access provider also owns trading business. In electricity sector, this has been avoided by legislation Open access without unbundling of services is beset with problems Early notification of CUF regulation required
Key recommendations/conclusion[2]
Consensus on multi utility regulator, else mechanism for coordination among regulators like in Sri Lanka (under PUCSL Act 2002) Avoid jurisdictional conflicts between CCI and PNGRB: recent case between RIL and OMCs
make regulator bound by CCI guidelines, or Allow representation of CCI before regulatory proceedings, or Constitute a common appellate body to ensure coherence in law enforcement Competition Act ( Sec 21 & 21A) provides a mechanism for reference to statutory body PNGRB Act is silent for such type of consultation Need to address legislative gap early
Recommendations/conclusions[3]
Formulation of policy for development of competitive gas market where gas is not traded as bundled products, and two types of markets are created such as transportation markets as well as gas market where participants trade natural gas as commodity. Like in electricity sector legislation, regulator be mandated to promote development of a market including trading, role of CCI is also important
Recommendations/conclusions [4]
In upstream only 20 percent of sedimentary basin explored. Need for independent regulator in upstream for level playing field, a concept be revisited Stakeholder participation in regulatory process, especially tariff determination be rigorous, legislative arrangements like in electricity sector be considered Cost plus regulation in transmission & distribution segments, to graduate to light handed regulation Early notification of various rules for empowering the regulator and providing adequate resources for strengthening regulator