Rajesh K Mediratta on transparency of Indian Gas Exchange and more

Q1: What was the purpose behind setting up IGX and how exactly did it happen?
Ans:
>Started working on Indian Energy Exchange (IEX) in 2007
>Introduced IT-enablement of the trading system in energy sector
>Trading system in power sector was not transparent before the IEX was set up
>Natural gas sector enjoys many marketers and importers of liquefied natural gas (LNG)
>The sector also lacked transparency, ease of doing business before the gas exchange (IGX) was established
>IGX platform was inaugurated in June 2020 by former minister of Petroleum & Natural Gas Dharmendra Pradhan
 
 
Q2: How do you see the progress made by IGX since inception? What kind of growth do you see in liquidity and do they meet expectations?
Ans:
>Witnessed impressive growth in volume during last financial year
>Volume tripled every quarter during the period
>Sellers that are usually PSU giants prefer to use the platform because of assurance of payment and fast payment cycle
>IGX started with 12/13 participating members. Today it has 26 members


Q3: What is the reaction of the smaller consumers? Does it meet their requirements or address their concern after the IGX was set up?
Ans:
>Exchange aims to facilitate small consumers get the best price
>Increased prices of gas during the last financial year made viability of small consumers limited
>Demand from large consumers that continue to buy gas at elevated rates are driving the volume growth
>As price of gas comes down, smaller consumers will join in
 
 
Q4: Govt now seems to be allowing domestic gas producers in the exchange. What kind of new projects or plans you have for IGX once the domestic gas reaches the market?
Ans:
>Domestic gas will give comfort to a lot of small buyers
>When domestic gas producers come on board the exchange they will need different delivery points
>Out of the five hubs in the country, four are LNG terminals
>Domestic gas producers generally sell near KG Basin
>Few domestic producers are also located in West Bengal and Jharkhand
>IGX applied to Petroleum and Natural Gas Regulatory Board (PNGRB) for approval of more domestic delivery points
 

Q5: India is a budding gas economy and wants to increase the share of gas in the overall mix from 6% to 15% by 2030. What will be the impact of high gas and LNG prices the country’s plans and on IGX?
Ans:
>High prices of gas and LNG will have impact on demand
> Prices would have been stable if there was no geopolitical crisis
>High prices of gas also impacted the govt’s vision for increasing consumption from 6% to 15%
>IGX has not been impacted as much because it got compensated by high volume of consumption by bigger players
 
 
Q6: It is clear now that Europe wants to reduce its reliance on Russian gas and have the target of 2026-2030, which coincides with India’s target. They can afford to outbid emerging markets. And then we have China that is ready to pay higher prices, as we saw last year. What can India do? Or, what role can IGX play in this? Are options limited?
Ans:
>For India, choices are limited because everything impacts the price and we are sensitive to price
>Europe and China will dominate the market because they have the ability to pay higher than emerging markets
>City Gas Distribution (CGD) and fertilizer will continue to grow