India to simplify gas pipeline tariff to boost demand

By Nidhi Verma

NEW DELHI (Reuters) - India is simplifying its gas pipeline tariff structure to make the fuel more affordable and to attract investment for building gas infrastructure in the country, oil minister Dharmendra Pradhan said on Wednesday.

Prime Minister Narendra Modi has set a target to raise the share of gas in India's energy mix to 15% from the current level of about 6.3% to cut its carbon footprint. Use of gas is also set to rise as India wants to push local manufacturing to cut costly imports and lift its battered economy.

Pradhan said the new tariff structure would help to create a single gas market in the country by attracting investment to complete the gas grid and make it more easily accessible. He did not provide more details of the new pricing structure.

The oil minister said India's current "zonal" tariff rates for gas pipelines resulted in higher transportation charges and had hindered development of gas markets and demand centres in remote areas.

India, the world's fourth biggest importer of liquefied natural gas (LNG), is spending $60 billion to strengthen its gas infrastructure that includes expanding the pipeline network and building gas import terminals.

"A level playing field (for tariffs) among the industries across the country will help in minimising their input cost and improve their competitiveness in global production," Pradhan, speaking at a joint webinar with International Energy Agency chief Fatih Birol, said.

He said new rationalised tariff would help to promote faster development of city gas project to connect households, industries and transport sectors with gas network.

(Reporting by Nidhi Verma. Editing by Jane Merriman)