India Gives Pricing Freedom to CBM Producers

India’s Cabinet Committee on Economic Affairs, chaired by the prime minister Narendra Modi, has allowed coalbed methane (CBM) producers to market and price the gas freely in the domestic market. The aim is to increase local production.

“While discovering the market price for arm’s length sales, the contractor has to ensure a fully transparent and competitive process for sale of CBM with the objective that the best possible price is realised for the gas without any restrictive commercial practices,” the Indian government said March 15. 

India's prime minister Narendra Modi (Credit: Prime Minister's Office)

CBM producers have also been permitted to sell the gas to any affiliate, in the event a contractor cannot identify any buyer. Royalty and other dues to the government, however, shall be payable on the basis of Petroleum Planning & Analysis Cell (PPAC) notified prices or selling prices, whichever is higher, the government said. 

India’s CBM sector has been suffering from an absent policy framework. Last year, a parliamentary panel said that India needed a new CBM exploration policy if it were to achieve its potential production volume. Only two private sector companies, GEECL and Essar Oil, are commercially producing CBM in India. Reliance Industries is expected to start production soon. 

Shardul Sharma