Gas allocation: Hobson's choice – 28 Oct 2021

This year last time was a bad year for the economy

Even so, LNG imports in September this year were lower by around 10% from what it was in September last year. High cost has inhibited LNG imports

As for allocation of scarce subsidized (in relation to international price or the landed price of LNG) domestic gas, it is clearly is a Hobson's choice for the government when it comes to allocating cheaper domestic gas: should it go to the fertilizer sector or to the CGD or PNG segment or the power sector? This government has decided to give priority to the CGD sector

In the process, the LNG content in urea production has gone up, and since gas price is a pure pass-through under the fertilizer retention policy, high cost LNG consumption by urea units is being funded entirely by the central exchequer

As for power, gas-based power has been unviable for a long time, and it is unlikely that this dynamic will change anytime soon

Know more for a disaggregated picture