India LNG demand to dip on phase out of subsidy for power sector

India's liquefied natural gas (LNG) demand could ease as the government has scrapped subsidies on gas sales to power companies, the chief executive of the country's biggest gas importer said on Wednesday at a gas conference in Japan.

Natural gas accounts for about 6.5 percent of India's overall energy needs, far lower than the global average. India plans to raise the share of gas in its energy mix to 15 percent over the next three years, but a major challenge to that goal is the price sensitivity of Indian consumers.

India has for the last two fiscal years been giving discounts on the sale of imported LNG to revive more than 14 gigawatts of stranded power generation capacity that had been hit by domestic gas shortages.

But a power ministry official confirmed that the LNG subsidy has not been extended beyond March 31, and Prabhat Singh, chief executive of Petronet LNG, said these gas-based projects cannot compete with plants using cheaper coal.