Indian supply of LNG to Pakistan has been exempt from basic customs duty. After months of negotiations and five meetings between the two governments, the Union Budget 2014-2015 announced that an exemption from basic customs duty of 5% was to be granted to regasified LNG for supply to Pakistan.
Waiving off taxes on LNG could finally help broker a deal for Pakistan to import LNG from India and combat severe gas shortfalls of up to 200 billion ft3/day. Without this reduction, the cost of importing LNG from its neighbour would have cost Pakistan an estimated US$ 21 per million Btu, which was considered unfeasible at a meeting between the countries in March.
A deal for the supply of 200 million ft3/d could be finalised in mid-August when an Indian delegation is expected to visit Pakistan to settle on the price of importing LNG.
Pipeline to export gas
The Indian government has proposed to construct a 110 km pipeline from Jalandhar to the Wagha border, which would supply natural gas to Pakistan. Pakistan agreed to implement a 30 km pipeline to pipe gas to its networks.
GAIL (India) would import LNG at its Maharashtra and Gujarat terminals and transport the regasified LNG through its network of pipelines to Jalandhar.
Edited from various sources by Ted Monroe
Image courtesy of Teekay LNG Partners.
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