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Cabinet approves marketing freedom and affiliate participation in non-regulated fields

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The union cabinet on Wednesday approved marketing freedom and allowed affiliate companies to buy gas from its parent company. A standard bidding procedure has been approved by the cabinet to discover the price of gas through transparent and open bidding.

The union cabinet on Wednesday approved marketing freedom and allowed affiliate companies to buy gas from its parent company. A standard bidding procedure has been approved by the cabinet to discover the price of gas through transparent and open bidding.
The government brought in pricing freedom in 2016 and in February 2019 onwards it allowed both pricing and marketing freedom for discoveries.
"The objective of the policy is to prescribe a standard procedure to discover the market price of gas to be sold in the market by gas producers, through a transparent and competitive process. These reforms will build on a series of transformative reforms rolled out by the government in the past several years,” said Dharmendra Pradhan, minister for petroleum and natural gas.
With marketing freedom in place for the companies invested in the KG basin, Coal bed Methane and some blocks in the northeast will benefit. It is positive for companies like Reliance Industries, Vedanta, and others.
The decision to allow affiliates to participate in the bidding procedure will allow the parent gas company to bid for the gas for its own use which was earlier prohibited.
Pradhan also said, “The government intends to maximise production and increase revenue by way of keeping prices attractive and competitive. The primary motto of the government to keep prices affordable for the end consumer”.
The guidelines for the electronic bidding will be prepared by the Directorate General of Hydrocarbons.
The move will help produce 40 million standard cubic meters per day (mmdcmd) from the KG basin as against 84 mmscmd of current production. India aims to increase its share in the energy basket from the current 6 percent to 15 percent by 2022. The government is also investing heavily in infrastructure to evolve a gas-based economy.

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