• 09 Dec 2014

December 1, 2014. The Pakistan’s Economic Coordination Committee (ECC) has approved incentives for liquefied natural gas (LNG) consumption in compressed natural gas (CNG) stations such as exempting imports from the gas infrastructure development cess. The Ministry of Petroleum and Natural Resources has taken the prime minister and his cabinet members on board over the planned consumption of LNG in CNG filling stations, claiming that the move will help save Rs200 billion (USD 1.9 billion) per year in oil imports. For handling LNG supplies, a fast-track terminal is being established in Karachi, which will start operating in the next three months and will be able to receive 400 million cubic feet of gas per day (mmcfd). “Tender for another 400 mmcfd capacity LNG terminal of Sui Southern Gas Company was floated recently and being pursued vigorously,” Abbasi said. In the meantime, he added, negotiations with China National Petroleum Corporation (CNPC) were under way for setting up an LNG terminal at Gwadar and laying of a pipeline from the port city to Nawabshah. In the private sector, CNG stations are the first that have come up with a plan to give up consumption of locally produced natural gas and use imported LNG. The power sector will be another consumer that will use imported LNG in place of furnace oil. The ECC has also decided to impose 5% general sales tax on LNG imports in all cases, instead of the prevailing tax rate of 17%. The government believes that this decision will facilitate the general public and encourage investment. The exemption from cess and the reduced sales tax will keep LNG 25% to 30% cheaper than petrol and encourage investors to set up more LNG terminals and related infrastructure, according to government officials. Owners of CNG stations stress that these moves will not only protect the Rs450-billion (USD 4.4 billion) investment in the industry, but will also stimulate a fresh injection of Rs100 billion (USD 982 million), protect thousands of workers from layoff and facilitate consumers. Source: www.gnvmagazine.com