Plea to exempt LNG from customs duty, VAT

The 'Mission LNG' workshop, led by the Kerala Chamber of Commerce and Industry, appealed to the Kerala government to urge the Centre to enforce a national-level pooled price for the natural gas by combing all sources of production in the country and imports as in the case of all other petroleum fuels

The 'Mission LNG' workshop, led by the Kerala Chamber of Commerce and Industry (KCCI), has urged the Centre and the Kerala government to exempt the Kochi Petronet LNG terminal from customs duty and value added tax (VAT) to bring down the price of LNG.

The high cost of LNG was the most important factor that stood in the way of buying and using LNG by the consumer segments in Kerala, the appeal said.

The pricing structure of natural gas in the country in highly distorted in favour of states that have proximity to gas fields. While the natural gas from Bombay High is being sold on the GAIL's HBJ pipeline for around $2.5-4.2 per mmBtu, the re-gasified LNG from import terminals at Dahej and Hazira (both in Gujarat) is being sold for $10-12 per mmBtu. The price of gas from the newly-commissioned terminals such as Kochi ranges from $19 to $24 per mmBtu, it said.

The meeting appealed to the Kerala government to urge the Centre to enforce a national-level pooled price for the natural gas by combing all sources of production in the country and imports as in the case of all other petroleum fuels.

As Kerala does not have gasfields, it is eligible for a legitimate share of the domestically produced gas. The Kochi LNG terminal has been commissioned now and the state has adequate infrastructure for receiving natural gas. Hence, Kerala should raise its claim for a due share of the domestic gas pool, it said.

Despite a blanket clearance covering all government departments for laying pipelines in 2010, Gas Authority of India Limited (GAIL) has not succeeded in laying pipelines in Kerala. This has become a major hurdle in increasing the Kochi Petronet LNG terminal's capacity utilisation and further expansion. The workshop said the state government should take adequate steps to enable GAIL to complete the laying of pipelines from the terminal to NTPC's Kayamkulam power station, Mangalore and Palakkad.

The 'Mission LNG' meeting was presided over by former MP K Chandran Pillai. Union Minister of State for Food and Civil Supplies KV Thomas introduced the theme.

A committee was formed under the leadership of KCCI director board member Biju C Cherian to monitor the follow-up activities of the Mission LNG meeting. The next meeting will be held after three months in this regard.