India’s gas prices: Two systems, one country

There are two gas-pricing mechanisms in India: the Administered Pricing Mechanism (APM) and the regime included in the New Exploration Licensing Policy (Nelp)

The price of imported LNG is not state-set and depends on bilateral contract negotiations and the international spot market. Implemented in 1987, the APM was the government’s attempt to encourage production from state-chosen nominated gas fields and undeveloped fields, via the Discovered Fields Exploration Policy (DFEP). Under DFEP, private companies, working with India’s state-run firms, negotiated prices through production sharing contracts for undeveloped fields. Once on stream, the gas is sold via state-owned company Gail at APM prices. Prices for APM and DFEP gas are set by the government via the state-runs firms or by a fixed formula agreed by private companies in joint ventures. It is