Govt plans to cut LNG import costs

ISLAMABAD:

The federal government has initiated preliminary steps to reduce charges and taxes on imported LNG, aiming to lower electricity tariffs, sources in the petroleum ministry said on Thursday.

Currently, substantial taxes are imposed on imported LNG, with port charges in Pakistan being the highest in the region. The sources suggested that reducing these port charges would lower the price of imported LNG, thereby decreasing the cost of LNG-based power generation.

At present, $4 in charges and taxes are applied per million British thermal units (mmbtu) of LNG, increasing the cost to $15 per mmbtu. In the market, imported gas is sold at Rs3,600, while locally produced gas is priced at Rs1,200.

"Reduction in port charges can lead to a significant reduction in the LNG prices. In this regard, the ports and shipping ministry has been contacted," a source told The Express Tribune. "Besides, the ministry also wants to reduce the port charges for the same price of petroleum gas," the source added.

The sources said that the government expected that after the reduction in the port charges, the price of imported LNG would come down to Rs2,800 and then the average price of gas would come to Rs1,800. In this way, electricity will become cheaper and the objections to tariff difference would be removed.