YSR urges Centre to set up domestic natural gas regulator

Expressing concern over the impact of gas prices on the state power sector, Andhra Pradesh chief minister Y S Rajasekhara Reddy has reiterated his demand that a market regulator be put in place for domestic natural gas.

"In view of the shortage of gas and limited players, pricing by an independent regulator, established by the statute, is essential as long as the shortage continues and the production is in the hands of a few monopoly producers," he said in a letter addressed to Prime Minister Manmohan Singh.

While questioning the views of the ministry of petroleum and natural gas that upstream gas prices were related to the market, the chief minister said it was not acceptable if the market being referred to was the international market as gas exploration and production were indigenous efforts.

"In countries which have gas reserves, the price of natural gas produced for the domestic market is not linked to international fuel prices. Further, the international price quoted by the ministry refers to LNG and not to natural gas and the two are not comparable," the letter said.

Requesting the Prime Minister to establish a statutory regulator to cover upstream gas pricing as well, Reddy said that any increase in gas price would have substantial implications on the price of power in the state resulting in increase in power tariffs.