India lacks infrastructure for gas-based economy: RasGas

Qatar's RasGas, the largest LNG exporter to India, today said the country continues to lack infrastructure to support a gas-based economy and it should consider including fuel in the GST regime, a demand that was supported by Oil Minister Dharmendra Pradhan.

Speaking at the Petrotech conference here, RasGas CEO Hamad Mubarak Al Muhannadi said India lacks infrastructure to support a gas-based economy and needs more LNG import terminal to unlock demand.

"India is a compelling market...(but) continues to lack infrastructure to support a gas-based economy," he said. "Coal and liquid fuels continue to meet the majority of India's energy needs." The country has two fully operational import facilities in Gujarat - Petronet LNG Ltd's 15 million tonnes Dahej terminal and Shell's 5 million tonnes Hazira terminal, and two partially operating ports - Dabhol in Maharashtra and Kochi in Kerala.

While the 5 million tonnes Kochi terminal operates at less than 10 per cent of the capacity in absence of pipelines to carry gas to customers, lack of breakwater facility at Dabhol makes the facility inoperational during raining season.

Also, the pipeline infrastructure in the country is mostly concentrated in western and northern India, leaving southern and eastern parts untouched.

India, the Asia's third-largest economy, will become the world's second-largest spot and long-term LNG buyer this year, Muhannadi said.

Commending India for adopting the progressive Goods and Services Tax (GST) regime which will replace a host of state and central levies including VAT, excise duty and service tax with a single tax, he questioned keeping natural gas LNG out of the new indirect tax regime.

"We should ask why is LNG and natural gas not part of GST while competing fuels of LPG, naphtha and fuel oil are," he said.

Petroleum products like kerosene, naptha and LPG will be under the ambit of GST, while five items in the basket � crude oil, natural gas, aviation fuel, diesel and petrol � have been excluded during the initial years.

Responding to his demand, Pradhan said his ministry supports industry demand for inclusion of all petroleum products under the GST regime but a call on this has to be taken by the GST Council.

"To make the concept of one-nation-one-tax come true, petroleum products should be included under GST," he said.

Pradhan said the industry will make a representation to the GST Council, headed by Finance Minister Arun Jaitley and comprising of representatives of all states, and his ministry will support that.

RasGas supplies 8.5 million tonnes per annum of LNG to India on long-term contracts and inclusion of natural gas and LNG in GST would make the fuel cheaper by eliminating multiple taxes, thereby making the fuel affordable for consumers.

Muhannadi said RasGas is seeing preference for short-term LNG contracts from customers in India.