The Finance Ministry is understood to have given its in-principle approval to GAIL’s plan to export 5 million metric standard cubic metres a day (mmscmd) of liquefied natural gas (LNG) to Pakistan. It is likely to waive duty on the proposed export.
Petroleum Ministry officials said the Finance Ministry had asked the Oil Ministry to work out the finer details in this regard.“The Finance Ministry is considering issuing an exemption notification based on the co-relation between LNG imported and re-gasified LNG exported in terms of energy units. We have been asked to find a way out and suggest a format for the same,’’ a senior Petroleum Ministry official said. Given the fragile nature of India-Pakistan relationship, the Finance Ministry has expressed caution, saying any abrupt disruption of the contract can lead to many complications. It wants issues such as what would constitute a Force Majeure incident, and how would the termination of contract be determined for the supply of LNG from India to Pakistan to be studied thoroughly. “The major worry is the loss of investment, as nearly $80 million will need to be invested for the pipeline from Jalandhar to Amritsar, and then to Lahore or the delivery point at the border. A certain quantity of LNG will also be needed to be stocked in advance in case of sudden disruption,’’ a senior official pointed out. On its part, GAIL has sought letters of credit from Pakistan for $415 million to cover the estimated value of RLNG supply for three months and a bank guarantee for $100 million to cover the minimum termination amount. It has proposed a 110-km pipeline, connecting the Dadri-Bawana-Nangal pipeline onwards to Jalandhar and then to the border near Attari. Negotiations have been held between the two sides, and it has been found technically feasible to export gas.