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LNG price may be higher than natural gas

Our Corporate Bureau in Mumbai

Liquefied Natural Gas is expected to be priced marginally higher than natural gas, BK Chaturvedi, secretary, ministry of petroleum and natural gas, said in Mumbai.

Chaturvedi said that the ministry has already finalised its pricing policy for LNG, and will place it before the Cabinet for discussion by the end of November.

The government is considering several sops for LNG projects, which attract huge investments in the sector, he said.

Chaturvedi was speaking in Mumbai on the sidelines of a press briefing by Ram Naik, Minister of Petroleum and Natural Gas, to announce a review of the pricing of natural gas by Mahanagar Gas.

Chaturvedi said that the sops to be meted out to upcoming projects would include awarding infrastructure status to such projects, in addition to giving them customs duties and sales tax exemptions.

LNG projects, which are capital intensive by nature, attract investments to the tune of $4-5 billion towards the construction of the liquefication and re-gassification plants.

India currently has several LNG projects still on the drawing board. Of these, three are in the pipeline in Gujarat alone - Shell Overseas project at Hazira, Petronet LNGs project at Dahej and British Gas project at Pipavav.

However, the LNG projects have thus far failed to take off as there are no takers for the gas.

The potential consumers - power plants and fertiliser units - are still non-committal to signing supply contracts due to the lack of reforms in the power sector, as well as the absence of any long-term pricing policy for fertilisers.

Meanwhile, the government is expected to announce prices of natural gas in a fortnight. Currently, natural gas in India is priced almost half of the international price of Rs 5,680 per thousand cubic feet of gas.

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