Diplomacy Takes Away Duty of LNG to Pakistan

Published: 11th July 2014 07:48 AM  |   Last Updated: 11th July 2014 02:41 PM   |  A+A-

NEW DELHI: In a diplomatic overture from the Narendra Modi government, supply of Liquefied Natural Gas to Pakistan, which is reeling under a severe shortage, has been exempted from basic customs duty. This waiver could finally lead to a revival of the proposal to supply LNG to Pakistan. The move, which could be touted as part of Modi’s vision of having networks of various types across South Asia, is an indication of the government’s inclination to encourage trade ties with Pakistan.

“Exemption from basic customs duty is being granted on re-gasified LNG for supply to Pakistan,” said the Union Budget 2014-15 presented by Finance Minister Arun Jaitley in the Parliament on Thursday.

LNG imports currently attract a duty of five per cent.

Both Indian and Pakistani officials had been in talks for supplying LNG across the two Punjabs. The proposal was for GAIL to construct a pipeline on the Indian side till the Wagah border, while Pakistan would build another 30 km of pipelines to inject gas into its network.

As per Pakistani media reports, the talks fell apart over pricing issue in March, as India had quoted a price which Pakistan considered unfeasible. However, at that time, Indian officials had pointed out that New Delhi could bring down the price by waiving off taxes on LNG.

Pakistan is suffering from an extreme gas shortfall of over 2 billion cubic feet a day, which has led to the shutting down of several industrial establishments. Pakistan’s initial plan was to import 200 million cubic feet of gas per day, with provision to ramp up the supply later.

The energy corridor and provision for most-favoured nation category for India could very well be the engine to bring both sides together. However, the wariness will remain in South Block until there is substantial improvement in the 26/11 case. Earlier this week, the 26/11 case, which came up in a Lahore court, was adjourned yet again.

Meanwhile, Pakistan foreign office spokesperson said on Thursday that foreign secretaries will be meeting ‘in not very distant future’. However, no dates have been set yet. India has been reluctant for a face-to-face meeting between the foreign secretaries, till Pakistan showed some progress in prosecuting the Mumbai attack masterminds.

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