Government Considers Reducing Taxes on Imported LNG to Lower Electricity Costs

Islamabad: The government is contemplating a reduction in taxes on imported LNG (Liquefied Natural Gas) to decrease electricity costs. According to sources, heavy taxes and port charges currently apply to imported LNG, amounting to $4 per MMBtu in charges and taxes. Consequently, LNG priced at $11 per MMBtu internationally costs $15 per MMBtu in Pakistan.
The Ministry of Petroleum has initiated preliminary work to reduce these charges and taxes and has reached out to the Ministry of Maritime Affairs to negotiate lower port charges. Sources suggest that reducing port charges could lead to a significant drop in LNG prices.
At present, port charges for LNG at Pakistani ports are among the highest in the region. Additionally, the Ministry of Petroleum aims to standardize gas prices by reducing port charges. If successful, the price of imported LNG could drop to PKR 2,800 per MMBtu from the current PKR 3,600, while local gas is priced at PKR 1,200 per MMBtu. Implementing a uniform gas price formula could bring the average price down to PKR 1,800, thereby reducing electricity costs and addressing provincial objections to tariff disparities.