Gas demand in India is price sensitive-II: Affordability is a big problem
Mar 21: The key to gas fulfilling its potential role as a ‘transition fuel’ up to and beyond 2030, is that it must be delivered to high-income markets below $8/MMbtu, and to low-income markets below $6/MMbtu (and ideally closer to $5/MMbtu). 8The major challenge to the future of gas will be to ensure that it does not become (and in many low-income countries remain) unaffordable or uncompetitive, long before its emissions make it unburnable. 8Research has shown that in a country such as India, there is an absolute price level, such as $5-6/mmbtu, above which customers can not afford to purchase the fuel either because of their income level, or because the end-user price level of the final product for which gas is being purchased would be too high. 8That fact that pipeline capacity utilization in India is low is a pointer to the inability of gas suppliers to find affording customers. 8KG Basin suppliers will have to keep these gas ceiling prices in mind while formulating their arithmetic. 8Another fact that points to the lack of affordability is the slowing down of demand when the price of gas has crossed the $10/mmbtu mark Click on Reportsfor a through analytical analysis of this affordability proposition.