The four hidden risks lurking in India’s gas expansion plans

India’s plans to remake itself into a gas-based economy are floundering. As the previous story in this series described, not only is the fuel controlled so tightly by the government that players struggle for viability, India is also running out of cheap domestic gas. The country’s new gas finds – in deepwater fields – and imported gas is too expensive to be viable unless the government steps in with subsidies or taxes rival fuels.

India’s Bharatiya Janata Party-led National Democratic Alliance (NDA) government, however, is moving in contradictory directions. On the one hand, it moots the creation of a gas exchange to boost gas trading in India. At the same time, however, it is also wondering if the existing carbon cess on coal should be waived.

Along the way, as the government delays structural reforms – while taking more expedient decisions – India’s gas sector is creating a new set of poorly understood risks for the country.

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