Date:17/01/2006 URL: http://www.thehindubusinessline.com/2006/01/17/stories/2006011703130900.htm

Back NCDEX spot gas trading being held up by delay in GAIL board approval

Pratim Ranjan Bose

Kolkata, Jan. 16

DELAY in securing a formal approval by GAIL (India) Ltd from its board of directors is holding up National Commodity and Derivatives Exchange Ltd (NCDEX) from launching spot trading in natural gas.

GAIL had earlier entered into an agreement with NCDEX to provide support system for physical delivery of natural gas. Ithad also expressed its interest in participating in the proposed trading.

According to sources, GAIL had failed to place the proposal for board's approval in December reportedly because of overcrowding of the agenda.

While NCDEX sources are hopeful that the proposal will be placed before the board during its next meeting scheduled on January 18, GAIL sources are not confident that this will happen.

"We are extremely hopeful that the trading will be launched in this fiscal," an NCDEX official said, adding that once GAIL's participation as a service provider was finalised, the exchange would encourage participation of corporates in the trading platform.

Earlier, before tying up with GAIL, NCDEX had tried to rope in Gujarat State Petroleum Corporation Ltd, a major player in the Western region, as the service provider to the trading platform.

The trading platform has evoked interest among major players in natural gas including Oil & Natural Gas Corporation Ltd, which is planning to use the same for higher prices.

Bharat Petroleum Corporation Ltd, which has a limited stake in natural gas supply through Petronet LNG, has expressed its interest in participating in the trading.

"Unlike in crude oil, natural gas does not have a global price benchmark which differs from country to country depending on the local supply demand scenario. While natural gas is expected to be a major source of energy in the years to come, the sector is yet to arrive at appropriate market prices in the absence of a trading platform," the official said, adding that the exchange planned to back the project with a futures market in due course.