The Ministry of Petroleum has initiated preliminary actions to lower the high taxes and port charges on imported liquefied natural gas (LNG) to make electricity more affordable.
Currently, international LNG prices stand at $11 per million British thermal units (mmbtu), but in Pakistan, they rise to $15 per mmbtu due to taxes and port fees. Approximately $4 of this cost is attributed to taxes and charges.
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In collaboration with the Ministry of Shipping and Ports, the Petroleum Ministry is considering reducing port fees, which are among the highest in the region. Officials believe that cutting these charges could significantly lower LNG prices, potentially reducing the cost per mmbtu from Rs3,600 to Rs2,800.
The disparity between imported and locally produced gas prices is driving the need for reform. Locally produced gas is currently priced at Rs1,200 per unit, while the new pricing formula might average around Rs1,800 per unit.
By addressing these charges and taxes, the government hopes to lower gas prices, which could lead to cheaper electricity and address concerns about tariff differences. If successful, this could provide substantial relief to both industrial and domestic consumers. Although these efforts are still in the early stages, reducing taxes and port charges could enhance market competitiveness and affordability.
