A (most favoured) friend indeed: Pakistan to import petrol from India

Notification allowing import of various fuels expected next month.

NEW DEHLI:

Pakistan is likely to allow the import of petrol and other fuels from India, from next month. Islamabad is expected to bring out a notification next month, to this effect which will allow the import of certain items including petrol and food items, Energy Secretary Ejaz Chaudhry said on Friday. Chaudhry said he discussed importing petrol from India during talks with his Indian counterpart GC Chaturvedi.

New Delhi has agreed, in-principle, to supply fuel to Pakistan from Bhatinda, where Hindustan Petroleum Corp Ltd is about to commission a refinery. Also, Indian Oil Corp (IOC) has a fuel depot at Bhatinda which can supply petrol and other products to Pakistan.

Pakistan, which is facing a fuel shortage, is looking to start petrol imports from India using tankers as early as next month, but wishes to sort quality and specification issues first. While initial fuel imports will be through tankers, a dedicated pipeline may be built in the future.

Chaudhry said Pakistan was also keen to import gas from India as well. State-owned GAIL’s newly-commissioned gas pipeline from India’s west coast to Bhatinda in Punjab is 45km from the Pakistan border and can be extended to Lahore.

Pakistan agreed last November to open up more trade with India by replacing a list of items its bigger neighbour can sell across the border with a shorter list of items that cannot be traded – a move regarded as key to improving commercial ties.

Pakistan has agreed in principle to grant access to imports from India under the Most Favoured Nation status, but has yet to fully implement the change.

“We have granted the Most Favoured Nation status to India. Our cabinet has approved it,” Chaudhry told reporters in the Indian capital.

“Our commerce ministry is in the final stages of documentation of a notification to bring out certain items from the negative list, including petrol,” he said. “The notification should be out in 14 to 15 days.”

Pakistan currently bans imports of Indian gasoline. It allowed diesel imports from India in 2009, but no Indian supplies were sent in the face of preferential prices offered by Pakistan’s allies such as Kuwait.

India’s oil minister S Jaipal Reddy had said in January that the country was examining a proposal to export petroleum products and gasoline to neighbouring Pakistan.

Chaudhry said Pakistan was aiming to build its first liquefied natural gas (LNG) terminal, which it hopes to commission in the second-half of the next year.

Four-to-five companies, including global oil major Royal Dutch Shell and South Korea’s Daewoo, have shown interest in supplying LNG to Pakistan under a tender seeking 500 million cubic feet a day gas, he said.

The government plans to award the tender in one month, Chaudhry said.

Chaudhry also discussed the transit fee to be paid for the proposed Turkmenistan, Afghanistan, Pakistan, India TAPI gas pipeline.  Officials said India has to pay a transit fee to Pakistan and Afghanistan for allowing passage of gas that it wants to buy from Turkmenistan. Similarly, Pakistan has to pay a transit fee to Afghanistan.

“We have agreed to a uniform fee. Pakistan has agreed that it will accept the same fee that India agrees to pay Afghanistan,” an Indian official said. Turkmenistan has already finalised a gas sale purchase agreement with all the participating countries for the $7.6 billion gas pipeline project, which will supply 3.2 billion cubic feet of gas daily.

Published in The Express Tribune, March 24^th, 2012.