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AUG 18 2014

India in advanced talks for gasexport to Pakistan

  • Economic Times, ET Bureau / Hyderabad
  • Created: Mon 18th AUG 2014

State-run gas utilities fromIndia and Pakistan are in advanced talks for export of gas via a pipelinerunning from Jalandhar in India to the Attari border and to Lahore in Pakistan.

Negotiations between the sides oncommercial aspects of the gas export are at an advanced stage, a petroleumministry official said.

While Pakistan has been askingIndia to re-consider the proposed gas price, India has sought sovereign paymentguarantees before entering into any contract.

Petroleum Minister DharmendraPradhan informed parliament earlier this month that negotiations are underwaybetween GAIL India and the Inter State Gas Systems (ISGS) of Pakistan forsupply of five million metric standard cubic metres a day (MMSCMD) of lean gasto Pakistan for a period of five years.

Under this proposal, GAIL wouldlay 110 km pipeline from Jalandhar to the Amritsar-Attari border. The technicalfeasibility of laying the gas line up to Lahore has already been ironed outafter five rounds of negotiations between both sides.

Liquefied natural gas, or LNG,will be imported through terminals in Maharashtra or Gujarat and then movedthrough GAIL's existing pipeline network up to Jalandhar. LNG would be gasifiedby the Indian side as Pakistan does not have an LNG import facility.

LNG imports into India arecurrently in the range of $13-14 per million British thermal units (mbtu) andafter including customs or import duty, pipeline transportation charges andlocal taxes, the delivered price will be close to $21 per mbtu.

Finance Minister Arun Jaitley inhis budget speech last month did not mention the bit on concession in gasexports to Pakistan, but included it in the relevant documents.

"Exemption from basiccustoms duty is being granted on re-gasified LNG (liquefied natural gas) forsupply to Pakistan," said the relevant section pertaining to theamendments in the Customs Act.

The basic customs duty stood at 5percent before.

India, on its part, has soughtsovereign payment guarantees from Pakistan, including sureties for threemonths' payment and advance termination commitments, the official said.

The pipeline project is alsobeing seen as a feasibility study for theTurkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline project through whichboth India and Pakistan propose to import LNG from the central Asian region.

Tags

Gujarat Maharashtra Finance Gas Pakistan Asia Petrol Petroleum Liquefied natural gas India Suryalakshmi Cotton Mills AP AIL

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