Indian Gas Exchange (an IEX company) Welcomes you to the launch of India’s first online gas trading platform June 2020
About IEX Indian Gas Market Overview IGX: Introduction and Value Offerings In this IGX: Market Model and Operational Framework presentation Way Forward Appendix 1
About IEX: IEX is operating Electricity Exchange successfully for last 11 years ✓ Market Share: 97% ✓ Facilitates trades for 40% of Short-term Market ✓ Average daily trade: 6000 MW+ ✓ High Participation: 4000+ (Electricity Market) ✓ Record Daily Volume : 308 MUs (12,900MW) 4000+ Industries I 55 Discoms (all) I 100+ ESCert Entities 400+ Generators I 1500+ RE Generators & Obligated entities ✓ Publicly listed company (NSE and BSE) ✓ IEX is regulated by the CERC (Central Electricity Regulatory Commission) ✓ ISO 9001:2015, ISO 27001:2013, ISO 14001:2015 Transparency Liquidity Competition 2
About IEX Indian Gas Market Overview IGX: Introduction and Value Offerings In this IGX: Market Model and Operational Framework presentation Way Forward Appendix 3
Indian Gas Market: Moving towards gas based economy (6% to 15% share) Natural gas consumption (MMSCMD) 27% 60 30% Consumption (MMSCMD) 50 20% 19% 166 49 6.2% 14% Sector's share 40 13% mmscmd 29 30 7% 10% 31 31 21 20 16 20 15 15 15 Total gas 19 18 18 10 10 Share of gas in Indian 10 9 consumption in India 3 3 energy mix FY19 0 -10% Fertilizer Power CGD Refinery Petchemicals Others Total Consumption Domestic Gas Consumption LNG Consumption Sector's Share Source: CRIS analysis Indian gas consumption split (mmscmd) 100% 25 LNG spot historical trend 47% 46% 170 50% 44% 20 41% 45% 19 165 20 80% 36% 16 40% 160 34% 14 35% 60% 15 13 13 155 30% 150 25% 10 40% 145 24% 20% 21% 19% 17% 140 15% 14% 15% 20% 5 135 10% 130 0% 5% 0 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 125 0% FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 Total LNG Import (MMTPA) LNG Spot (%) 4 Source: PPAC Total LNG Imports Source: CRIS analysis
Natural gas infrastructure in India is witnessing significant investments in pipelines & LNG import terminals Significant natural gas pipeline expansions planned by A number of LNG import facilities planned to meet various entities expected future demand Current terminals Future terminals BPCL RGPPL (GAIL_NTPC JV) Srinagar AG&P Existing pipelines HLPL (Hazira LNG Pvt Ltd) Jammu H-Energy Gateway Pvt Ltd. PLL (Petronet LNG Ltd) Under construction pipelines Nangal Ludhiana Swan Energy + Mitsui O.S.K. IOCL Ennore LNG Mundra LNG IOCL + Adani + GAIL Panipat Hissar Delhi Chhainsa GAIL + AP Govt. (JV) Barelly Dadri Jagdishpur Kota Jaigarh PLL (Petronet LNG Ltd) Phoolpur Phsopur, HSEL Udaipur Gaya Palanpur Vijaypur Mehsana Shahdol Mundra Dahej Dahej Chhara Surat Dhamra Jafrabad Paradip Hazira Panvel Uran Vishakhapatnam Pipeline network (km) LNG imports capacity (MMTPA) Srikakulam Dhabhol Dhabhol Mallavaram Gangavaram +88% +66% Kakinada (km) (MTPA) Kakinada Jaigarh 32,000 62.5 Krishnapatnam Nellore Bangalore Mangalore Ennore 17,000 Chennai 37.5 Ennore Kanchipuram Palakkad Madurai Kochi Karaikal FY2019 FY2022e Kochi FY2019 FY2022e Tuticorin 5 Source: IGX Analysis
Demand estimation: Sector wise demand built-up …Through bottom -up estimation of Sector-wise gas demand built- up… industry growth drivers • Fertilizers 400 380 – 10% import substitution by new capacity by 2030 – Agricultural growth rate to remain ~2-3% 86 • CGDs 300 – New CGDs to be operational from 2022-23 261 46 – Boost in demand due to urbanization and demand shift to natural gas in existing CGDs 59 55 > 200 • Industrial 30 166 – Industrial growth to remain linked to the long-term GDP 43 37 90 growth rate for India 18 • Petrochemicals 100 31 68 93 83 – Govt. initiatives (Make in India, PPCIR), economic 49 growth to push the production capacity 103 61 31 • Power industry: 0 – Revival led by peak demand growth and support for RE FY19 FY25 FY30 integration CGDs Fertilizers Power Petrochemicals Industrial Total – Capacity replacement to the extent of retirals 6 Sources: NITI Aayog, McKinsey, BCG, IEA Energy Outlook, IGX Analysis
Significant pain points exist in the current market which restrict the country to realize its full potential No Transparency No Flexibility No Direct access in pricing of gas due to bundled contracts, for market players to procure gas on to buyers to buy gas directly from the market, No visibility to consumers on element wise day-ahead or week-ahead basis, increasing suppliers' bargaining power and pricing (commodity and transmission)- Depriving consumers of fine tuning hence higher prices to consumers (specially to lowering their ability to negotiate their requirement marginal buyers) High transaction costs No Payment Security Negotiations, GTA signing, payment Sellers exposed to counter party settlements are time consuming default risk 7
About IEX Global and Indian Gas Market Overview IGX: Introduction and Value Offerings In this IGX: Market Model and Operational Framework presentation Way Forward Appendix 8
Indian Gas Exchange (IGX) OUR VISION To lead India’s transition towards a gas -based economy by architecting next generation solutions for natural gas trading and access. 1 st natural gas Automated 0 1 02 platform with trading cutting edge exchange technology Efficient & transparent 03 04 Indigenous market driven price discovery price discovery mechanism 9
Indian Gas Exchange (IGX) is backed by IEX, the leading power exchange in India Superior exchange Strong connect across 10+ years technology, sourced market participants, of successful from a leading global specially industries operations of a power player trading platform Robust market model Financially backed by customized to suit Indian strong players market players’ requirements 10
Led by an able management team Rajiv Srivastava, Director Rajesh Mediratta, Director Vineet Harlalka, Director Vineet is also serving as the Chief Rajesh is also the Director of Strategy Rajiv is also the MD and CEO of our Financial Officer, Company Secretary of our parent Company, IEX. parent company, Indian Energy and Compliance Officer of our parent He has more than 30 years of Exchange. Company, IEX. experience in the power sector and He has more than 25 years of He has more than 20 years of more than 10 years of experience in experience in the technology sector. experience in the field of finance, running the power exchange. taxation, and treasury. Deepak Mehta, Head of BD Vikas Guliani, VP-Regulatory & BD Prasanna Rao, Head-Market Operations Deepak has over 20 years of Vikas has over 15 years of Prasanna has more than 20 years of experience in the oil & gas industry experience in the oil and gas industry. experience in market operations of and commodities. equity, commodity and power exchanges. 11
About IEX Global and Indian Gas Market Overview IGX: Introduction and Value Offerings In this IGX: Market Model and Operational Framework presentation Way Forward Appendix 12
Market Model: Physical Trading hubs Physical Trading Hubs (Delivery points) Core Strategy I: Market Participants • Transmission Pricing is route based, therefore multiple physical hubs. • Can move to Virtual hubs, if we adopt Unified Tariff or Entry-Exit pricing Planned Hub Delivery point launch date Dahej Ex terminal, after regas Immediate Dahej Hazira Hazira Mora interconnection point Immediate Kakinad Gas land fall point (Kakinada/ Oduru) Immediate a Dabhol/ Kakinada Jaigarh Interconnection point of ‘Jaigarh -Dabhol Dabhol/ tie- in connectivity pipeline’ & ‘DBPL’ Q2 2020 Jaigarh pipeline Ennore Kochi Ex terminal, after regas Q3 2020 Ennore Ex terminal, after regas Q3 2020 Kochi 13 Mundra Ex terminal, after regas Q3 2020
Market Model: Trading products and timetable Exchange Trading window Trading hours (IST) Tenor Trading window (E) products (S) 10:00 – 12:00 Day-ahead * 1 Gas Day D-1 business days D-1 business days 10:00 – 12:00 Daily 1 Gas Day D-9 business days D-2 business days 10:00 – 12:00 Weekly 7 Gas Days D-5 business days D-5 business days 10:00 – 12:00 Weekdays 5 Gas Days D-5 business days D-5 business days 13-16 Gas Days 10:00 – 12:00 Fortnightly D-6 business days D-6 business days (1-15 & 16-EoM) 10:00 – 12:00 Monthly Calendar Month D-9 business days D-9 business days 14 * Subject to getting capacity booking confirmation for next day
IGX Governance Structure Members/clients Market Rules: Bye-laws: Govern the day to day contain the essential rules for the operations of IGX, rules of organization of IGX, the tasks of its trading, the relationship committees/bodies as well as the between IGX and its preconditions for access to trading. members/clients. Circulars: IGX communication Contract Specifications: with its members As part of the market rules, and/or clients include the rules regarding execution of trading and, in particular, the trading forms, the order types and the execution of orders. 15
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