Indian Gas Exchange launches new contract for fertiliser industry

The Indian Gas Exchange (IGX) on May 19 announced the launch of a specialised contract for the fertiliser industry. IGX said that this customised contract offers several benefits to the fertiliser industry, including increased flexibility, reduced overall costs, and effective demand management.

One of the key features of this contract is the relaxation in payment terms, with a fortnightly payment cycle. Instead of the existing practice of daily payment, buyers in the fertilser sector will now be able to invoice on a fortnightly basis. This allows them to focus on sourcing gas without the immediate pressure of payment, IGX said. Additionally, the fertiliser sector will have the advantage of purchasing gas at zero transaction fees, enabling them to optimise costs.

The new contract also introduces a reduced take-or-pay provision, which allows entities to source gas at 80% of the total daily contract quantity for the contract period, compared to the previous requirement of 90%. This provides more flexibility to buyers to source gas according to their delivery requirements.

"We have ambitions to create a well-functioning liquid, ease-to-access, flexible and market-friendly trade platform for all industry segments in the sector. The launch of this innovative contract is yet another initiative to benefit the fertiliser industry, which is the largest consumer of natural gas in India,” Rajesh Kumar Mediratta, CEO of IGX, stated. “The new contract offers more flexibility, efficiency and easy trading to the fertiliser entities, maximising benefits for the industry. It will also ensure competitive price discovery, reducing the procurement cost for the entities.”

IGX currently offers delivery-based trade in six different contracts, including day-ahead, daily, weekday, weekly, fortnightly, and monthly, which can be executed for up to six consecutive months.

Gas trade takes place at multiple delivery points across India, including Dahej, Hazira, Ankot, Mhaskal, Bhadhbhut, Dabhol, KG Basin, Gadimoga, and Suvali. These delivery points are part of six regional gas hubs, namely, western hub, southern hub, eastern hub, central hub, northern hub, and north eastern hub.