LNG imports for supply to Pak exempted from customs duty

With India’s plan to export gas to Pakistan running into price hurdle, finance minister Arun Jaitley on Thursday exempted import of liquefied natural gas (LNG) for onward sale to the neighbouring nation from customs duty. ‘Exemption from basic customs duty (of 5 per cent) is being granted on re-gasified LNG for supply to Pakistan,’ the Budget for 2014-15 said. State gas utility GAIL India Ltd had planned to import LNG in ships at ports on the west coast and then pipe the gas to Jalandhar from where a small pipeline would take the fuel to Attari. While India was willing to export 5 million standard cubic meters per day of gas, Pakistan had expressed reservation about the high price.
LNG imports into India are currently in the range of USD 13-14 per million British thermal units and after including customs or import duty, pipeline transportation charges and local taxes, the delivered price will be close to USD 21. The cut in customs duty would bring down the cost by up to 70 cents. A 110-km pipeline would have to be laid from Jalandhar in Punjab leading to Attari. Both India and Pakistan have till date held five rounds of negotiations and it has been found technically feasible to export gas into Lahore.