Ministry Proposes Reduction in LNG Port Fees to Lower Energy Prices

Pakistan-The Ministry of Petroleum has initiated preliminary measures to lower the substantial taxes and port fees applied to imported liquefied natural gas (LNG), aiming to make electricity more affordable.

Currently, the international cost of imported LNG stands at $11 per million British thermal units (mmbtu). However, due to taxes and port fees, the price in Pakistan rises to $15 per mmbtu.

The cost breakdown shows that approximately $4 per mmbtu is attributed to taxes and charges, significantly increasing the final price for consumers.

In collaboration with the Ministry of Shipping and Ports, the Ministry of Petroleum is exploring ways to reduce port fees, which are among the highest in the region for LNG.

Officials believe that cutting these port charges could substantially lower the price of imported LNG. If successful, the cost per mmbtu could decrease to around Rs2,800 from the current Rs3,600.

A source from the Ministry of Petroleum noted that the significant difference between the cost of imported and locally produced gas is a major driver for this reform.

Govt announces reduction in petroleum prices: Check latest rates here

Presently, local gas is priced at Rs1,200 per unit, while the new pricing formula could bring the average cost to approximately Rs1,800.

Addressing these taxes and port charges is expected to reduce gas prices, which would also lead to lower electricity costs, addressing one of the major concerns regarding tariff differences between provinces.

An official from the ministry indicated that, if the proposal is approved, it could offer substantial relief to both industrial and domestic consumers nationwide.

Sources confirmed that these efforts are still in the early stages, but reducing taxes and port charges could lead to a more competitive energy market and greater affordability for consumers.

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