The Indian Gas Exchange (IGX) is India's first automated national-level trading platform for natural gas. It was launched on June 15, 2020.
The exchange operates under the regulatory framework of the Petroleum and Natural Gas Regulatory Board.
Significance: It facilitates transparent price discovery in natural gas and promotes the growth of the share of natural gas in India's energy basket. The exchange allows buyers and sellers of natural gas to trade in the spot market and the forward market, and it covers six regional gas hubs across India.
It is playing a pivotal role in enabling India's transition to a gas-based economy by benefiting gas producers, transporters, and consumers.
IGX has reported a significant increase in its trading volume, indicating its growing importance in the Indian natural gas market. It is a significant development in India's efforts to promote a more efficient and transparent natural gas market.
Mechanism: The process for buying and selling gas on the Indian Gas Exchange (IGX) involves the following key aspects:
Trading Platform: IGX is a digital trading platform that allows buyers and sellers of natural gas to trade in the spot market and the forward market.
Regasification and Sale: 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.
Shorter Contracts: The exchange allows much shorter contracts, for delivery on the next day, and up to a month, providing greater flexibility to buyers and sellers.
Delivery Points: The gas trade takes place at multiple delivery points, such as Dahej, Hazira, Ankot, Mhaskal, Bhadhbhut, Dabhol, KG Basin, and Gadimoga.
Price Index: IGX has launched India's first gas price index (GIXI) to derive a single price for the country in line with international benchmarks.
Challenges: It faces several challenges, including inadequate domestic gas production and costlier imports, the revival of gas-based power plants, the competitiveness of gas prices, the need for regulatory changes, and the overall goal of developing a gas-based economy.
Additionally, the IGX is challenged by the need to establish itself as a benchmark for pricing LNG, similar to established markers in other countries. Furthermore, the IGX must address the consistency of different policy actions, issues with the implementation of reforms, and the competition between renewables and coal.
Despite these challenges, the IGX is playing a pivotal role in enabling India's transition to a gas-based economy by benefiting gas producers, transporters, and consumers.
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