Indian Gas Exchange
News: Ministry of Petroleum and Natural Gas has launched the Indian Gas Exchange (IGX), first nationwide online delivery-based gas trading platform.
What is IGX?
- IGX will be a delivery-based trading platform for delivery of Natural Gas.
- Incorporated as a wholly owned subsidiary of the IEX – India’s energy market platform, IGX will enable market participants to trade in standardised gas contracts.
- The platform is fully automated with web-based interface to provide seamless trading experience to the customers.
- Imported Liquified Natural Gas (LNG) will be regassified and sold to buyers through the exchange, removing the requirement for buyers and sellers to find each other.
- This will mean that buyers do not have to contact multiple dealers to ensure they find a fair price.
- The exchange also allows much shorter contracts – for delivery on the next day, and up to a month – while ordinarily contracts for natural gas supply are as long as six months to a year. This, experts say, will allow buyers and sellers greater flexibility.
- As there will be a market driven pricing mechanism, India Gas Exchange will play a bigger role towards realising a free market for gas.
- The IGX is a digital trading platform that will allow buyers and sellers of natural gas to trade both in the spot market and in the forward market for imported natural gas across three hubs —Dahej and Hazira in Gujarat, and Kakinada in Andhra Pradesh.
- The new electronic trading platform completes the entire energy value chain from gas production from multiple sources and imports of LNG from different parts of globe to having a transparent price mechanism.
- An independent system operator for natural gas pipelines would help ensure transparent allocation of pipeline usage, and build confidence in the minds of buyers and sellers about neutrality in the allocation of pipeline capacity.
- Experts have also called for natural gas to be included in the Goods and Services Tax (GST) regime to avoid buyers having to deal with different levies such as VAT across states, when purchasing natural gas from the exchange.