Big tax breaks promised in 'Integrated LNG Policy'

Vol 6, PW 18 (06 Nov 02) People & Policy

THE TIMING COULDNT have been better.

As LNG projects scurry for cover in the wake of Reliance's massive gas find, the oil ministry has come up with a number of incentives to make LNG more attractive. We learn the ministry is ready with a revised version of an Integrated LNG Policy to replace one that was prepared a year back and ultimately scrapped.

We understand the revised policy is "ready to go before the cabinet for approval"and that at its core arethe below incentives for the LNG sector till 2010. Abolition of the present 5% tariff on imported gas LNG import projects will fall under the 'Infrastructure Facility' bracket, giving them huge income tax breaks Import tariffs on capital goods and equipment for LNG facilities will be reduced to zero from 25% When implemented, LNG projects will enjoy the same concessions available to large power projects.

Put together, the ministry hopes these measures will make LNG more competitive againstcheaper domestic gas. Reveals the ministry: "Our aim is to promote the use of LNG which is costlier than natural gas by $1 per mmbtu because of liquefaction, transportation and regassification." The revised LNG policy also plans to continue with existing policies.

These include: Unrestricted import of gas No ceiling on the quantity or price of imported LNG or on regassified LNG Transportation through 'Common Carrier' pipelines with the tariff laid down by the regulator Undoubtedly, Petronet-LNG and Shell will both be delighted with this package!