1. Gas in Power Generation Regulatory Issues and Concerns

2. The Regulatory Context Choice of Technology Choice of Fuel Choice of Supplier Choice of Transporter Regulation of Tariff Load Dispatch

3. Choice of Technology Coal Gas Oil Nuclear Hydro What is the regulators views on optimal capacity addition by utilities?

4. The Genco’s perspective Existing CCGT (Gujarat) Existing CCGT (~Mumbai) New CCGT (Gujarat) New CCGT (~Mumbai)

5. Existing CCGT (Gujarat) CCGT (G) Ex GAIL- ONGC Ex GSPC- Niko/Cairn Ex Petronet Ex Shell India Ex PMT Consortium Whose Pipeline? What tariff? Ex LDZ GAIL GSPL Gas Price? Pipeline Tariff? Ex Reliance?

6. Diversity of Gas Prices ($/MMBTU)(Rs./MSCM) (A)Ravva3.005475 (B)RAWA SATELLITE3.306025 (C)TAPTI & PANNA MUKTA 3.115675 (D)Pvt. PRODUCERS3.676670 (E)RELIANCE GAS2.704930 (F)NELP GAS/LNGMARKET DETERMINED PRICE (G)ONGC GAS~1.502850 Source: Infraline

7. Existing CCGT (~Mumbai) CCGT (M) Ex GAIL- ONGC Ex GSPC- Niko/Cairn Ex Petronet Ex Shell India Ex PMT Consortium When Pipeline? Whose Pipeline? Offshore system of ONGC Landfall at Uran Ex Reliance? Limited choice at present Wider choice in the future? Gas Price? Ex Dhabol?

8. New CCGT (Gujarat) Run a global tender (a la NTPC)? Long term (25 years) Medium term (5-10 years) Short term (3-5 years) Negotiate with known sources and close? LNG projects in the Middle East NG fields in India Bank on the Spot Market/Short term market Leave gas transmission infrastructure to Gas Sellers? Existing Pipelines? Or New Pipeline

9. New CCGT (Mumbai) Similar issues for gas procurement Direct procurement from ONGC? At market price? Long term choices from LNG: But, where is the pipeline for LNG/NG? Dahej-Uran (GAIL) Kakinada-Uran (Reliance) Dhabol-Uran (?)

10. Key Regulatory Issues Does the electricity regulator have a say on gas procurement decisions when approving generation tariff? Does the regulator have any say on Gas pricing? Indexation? Gas transmission tariff? Contract terms and conditions? Contract duration? Take or Pay obligations? Electricity or Gas Regulator: overlaps?

11. Key Regulatory Issues End user tariff is regulated By SERC and CERC Imported gas price is not regulated What would be gas prices at oil $50/bbl? Gas and power markets are not integrated No national grid or regional grid of gas except Gujarat Spike in imported gas prices may lead to California like collapse of the LNG value chain Who has deep pockets to absorb such shocks? Can the economy absorb the shock?

12. Natural Monopoly? Gas transmission may be a “natural” monopoly In specific geographic segments where depreciated pipelines exist Where consumers have no choice but the incumbent supplier Gas transmission need not be a “statutory” monopoly Any one willing to invest in transmission capacity should be welcome (investors are rational) Consumers should have choice A network code/Gas Trading system is a must for mature markets New trunk pipeline capacity (Dahej-Uran, Kakinada- Uran) will come up only when backed by gas producers and gas sellers