With the worldwide production of liquefied national gas (LNG) expected to double within the next five-to-six years and demand in the country set to expand, the Petroleum and Natural Gas Ministry is coming up with a new LNG policy .

The policy will provide level-field for new and old terminal operators, offer free-to-market LNG at market-driven prices and make Petroleum and Natural Gas Regulatory Board (PNGRB) the regulatory body for giving licence for pipelines.

The policy is expected to lay the ground rules for an array of issues - setting up LNG terminals, qualification for setting up such terminals, their capacity, marketing of gas, laying pipelines.

According to documents floated by the Ministry and various stakeholders, the government has proposed that since the capex involved in LNG terminal is very high, the LNG terminal company should be given freedom to market LNG at market-driven prices in adjacent areas without restrictions of city gas distribution circles. The PNGRB will be given the authority for granting permission for setting up captive/dedicated pipelines for transporting the fuel to the nearest market by the LNG player. It is also proposed that the LNG player should be asked to complete the project within six years from the date of registration, and the applicant has to start construction within two-and-a-half years from the date of registration.

It is also proposed that a land/floating LNG terminal should have a minimum import and re-gasification capacity of 2.5 million tonnes per annum. There should be provision for extra capacity to be made available for third party. Access to third party should be based on non-discriminatory tariffs to be determined by the PNGRB. A minimum of 25 per cent of design capacity shall be created as open access capacity at regulated tariff. For independent power producers (IPPs), backward integration should not be restrained by putting irrelevant criteria.

It is also stated that efforts should be made to ensure that regulatory hassles for small/medium-size players should be minimised. The applicant or company should be operating an infrastructure project of more than Rs.500 crore in capital cost, and the developer should have at least five years experience of owning/operation of hydrocarbon installations. The policy also proposes level-playing field for both new and old terminal operators with respect to the eligibility conditions.

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