Gas pricing and some issues
Natural gas demand in the country runs far ahead of supply. India imports nearly a quarter of its needs but fails to meet demand. This is due to insufficient domestic gas production and full utilization of existing import capacity.
Why Gas Pricing in news?
The government last week announced the new price of natural gas produced in the country, as part of a periodic revision mandated by the new gas pricing formula that it adopted in October 2014.
- The formula mandates a price revision once every six months on the basis of the prevailing prices in gas-surplus countries such as the United States, Mexico, Russia and Canada.
- So the new price of $3.8 per unit — in effect from October 1, 2015 to March 31, 2016 — is 18 per cent lower than the previous price.
- This is likely to hurt producers such as Oil and Natural Gas Corporation and Oil India, but will be welcomed by CNG and PNG consumers,
- Also, fertilizer subsidy will be less onerous and uphill task for the government.
About Gas Pricing:
- The price of natural gas in India is not market-determined.
- The domestic gas price is the weighted average price of four global benchmarks.
- The domestic price is based on the benchmark prices in the prior year and kicks in with a quarter’s lag.
- It applies for six months.
- Gas prices in Asia are typically higher than other global benchmarks due to the demand-supply dynamics in the geography.
Several issues that come along New Gas Pricing Formula:
- The price in India is pegged on the benchmark prices of the previous year, and takes effect after a time-lag of a quarter.
For example, the price applicable in the period April 1-September 30, 2015 was based on the average benchmark prices over January-December 2014. This means India’s gas prices follow the global cues with a time-lag.
- The government in its wisdom decided to peg the price of Indian gas in respect of the prevailing prices in gas-surplus countries such as the United States, Mexico, Russia and Canada.
Why these four hubs mainly? This remains the concern and chief argument which proves the formula ambiguous is the fact that prices are higher in Asia.
- The Rangarajan Committee took this fact into account and recommended $8.4 per mmBtu, but it was ignored.
Controversy in past:
- Then there is the question that why gas prices must be linked to the market if the cost of supplying it in India — namely, out of Reliance Industries’ KG-D6 basin — is a fraction of the market rate.
- One of the most important issues to do with the price of domestic gas being pegged to global benchmarks is that any gains could be offset by losses on account of the rupee’s movement.
- Several research agencies say the almost 6 per cent depreciation of the rupee over April-September 2015 will mean the net impact of the fall in the price of gas will actually be significantly lower.
- Gas pricing is a politically sensitive issue, it being a key input in important sectors such as fertilizer and power.
In the coming years, if domestic output does not increase and the dependence on imported gas rises, the country may end up paying more.
Much as in the case of oil, the government has been lucky that prices of natural gas are falling globally. But this could well be temporary: if the global price increases, then the price in India will also eventually increase.
Connecting the dots:
- How is gas pricing determined in India? Is it the right approach to determine gas pricing based on global benchmarks?
- What are the issues that come along with the new gas pricing formula? How can these issues be addressed?
- A derivative of ‘Avermectin’
- Developed by
- William Campbell (Drew University in Madison, New Jersey)
- Satoshi Ômura (Kitasato University in Tokyo)
- Eradication of ‘River Blindness’–
- Parasitic infection
- Spread: Bites of infected black flies that breed in rapidly flowing rivers, thus, increasing the chances of people residing nearby, to get affected
- Intense itching
- Skin discoloration
- Eye disease often leading to Permanent Blindness
- Reduction of the incidence of ‘Lymphatic Filariasis’-
- Common Name: Elephantiasisà Painful + Disfiguring disease
- Caused by three species of thread-like nematode worms:
- Filariae – Wuchereria bancrofti,
- Brugia malayi and
- Brugia timori
- Male + Female worms: Together form “nests” in the human lymphatic system
- Major Social + Economic impact on the country
Discovery of Artemisinin
- By Tu Youyou (China Academy of Chinese Medical Sciences in Beijing)
- Treatment of Malaria
- Formulated through the synergy established between traditional knowledge and modern means
- Extract from Artemisia annua (sweet wormwood): Redesigned + Purified + Made safe
- Ability to reduce the number of Plasmodium parasites in the blood of patients with malaria at a fast pace
- Recommended by WHO: First-line treatment for P. falciparum malaria
- Artemisinin Resistance:
- Recovery happens with the help of effective partner drug
- Increase in Resistance instances:
- Poor treatment practices
- Inadequate patient adherence to prescribed antimalarial regimens
- Widespread availability of oral artemisinin-based monotherapies
- Substandard forms of the drug
- 198 million cases of malaria
- Estimated 584,000 deaths worldwide
- Over 90 per cent of them in Africa
Artemisinin Resistance Confirmed: Five countries of the Greater Mekong sub-region
- The Lao People’s Democratic Republic,
- Myanmar (close to the Indian border)
- Thailand and
- Over 40,000 people in India die each year
- World Malaria Report 2011: Over 70 per cent of India’s population is at risk of malaria infection
- India’s Mekong-Ganga MoU with Cambodia and Indo-US Vaccination Program for Malaria, needs to be supplemented with timely development and increased coordination in the research, development and understanding of their cycles and epidemiology.
- The deep understanding of the environment with a greater synergy between the traditional knowledge and modern medicines is the key towards controlling them, if not their complete eradication.
- There is also a need to ban the non-therapeutic use of antibiotics that are employed for the production of food producing animals as they can invade human body and be a facilitator of another global epidemic.
Connecting the Dots:
- The world can benefit from the strengths of both conventional science and indigenous knowledge systems. Discuss
- Examine India’s tryst with ‘Vector borne diseases’
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