Customs duty cut on LNG import for Dabhol sought  

The Ratnagiri Gas & Power Pvt Ltd (RGPPL), which has acquired 2,184-mw Dabhol project, has requested the power ministry for a customs duty exemption on liquefied natural gas (LNG) import. RGPPL's plea is crucial as the company is planning to shift its project operation to LNG from naphtha after March. The government has already given custom duty exemption on imported naphtha after the project was resumed in July.

According to RGPPL sources, Petronet LNG Ltd (PLL) will annually import 1.2 million tonne LNG between March 2007 and June 2009 at its Dahej terminal and the regasified LNG will be supplied through the proposed Dahej-Panvel-Dabhol gas pipeline of GAIL India to the project. The company has argued that the waiver in the customs duty would help bring down the per unit tariff substantially. GAIL India, which has failed to close LNG supply deal for the project, has communicated to the Centre that the Dahej-Panvel-Dabhol pipeline would be ready by March.

Sources said that PLL had indicated that it would be able to supply LNG directly or through some off-taker. However, PLL has said that since the terminal capacity at Dahej was fully utilised, there might be occasions wherein the LNG would have to be imported, regasified at Shell's Hazira terminal for onward supply to RGPPL through Dahej-Panvel-Dabhol gas pipeline.

RGPPL has called upon the power ministry to take up the matter with the finance ministry for issuance of the suitable modification to relevant customs notification for facilitating customs duty-free import of LNG by PLL or any other designated agency at any terminal. Sources recalled that the finance ministry had issued a customs notification on September 30, 2005, exempting LNG imported by RGPPL for the purpose of generating power from levy of customs duty for a period of five years beginning October 2005. However, due to non availability of LNG, RGPPL was forced to restart the project from April 30 last year on naphtha.  

Source: The Financial Express, Mumbai
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