Govt relaxes restrictions on transport of LNG

It was Prime Minister Manmohan Singh who asked the Commerce and Shipping ministries in July 2005 why such restrictions were being imposed on the transportation of LNG into the country and even asked the Commerce Ministry to bring the matter to the Cabinet if it could not be resolved.

The Ministry of Shipping, on its part, had made it very clear that the domestic shipping industry needed to be given support in the new LNG shipping policy. In a background note on this matter, the ministry said, ‘‘It is our experience that unless support is provided to Indian shipping, the developments of Indian flag carriers in niche area does not take place.’’ It even referred to the 2004 guidelines of the DG, Shipping, which it says helps ‘‘develop LNG tonnage under Indian Flag’’. In fact, Shipping Minister T R Baalu clearly said in November last that ‘‘these imports (LNG) should be on free on board basis’’ and that there should be a rider where technology would be transferred to domestic shipping companies.

After keeping the earlier guidelines in abeyance, official sources said that as per the decisions taken by the government on this matter, the position will be reviewed at least once a year. The Shipping Ministry feels that most new contracts for LNG transportation were on f.o.b basis as buyers feel this gives them more control over the landed price and also allows them to trade the surplus cargoes.

They said the review would be done by an inter-ministerial committee which has commerce secretary, the petroleum secretary, the power secretary and the shipping secretary as members. The DG Shipping and the Director General of Foreign Trade would also be part of this committee.

They added that this committee would ‘‘keep track of changing market situation and suggest changes in the policy as and when required’’. Furthermore, ‘‘in case of difference in opinion, the matter shall again be placed before the cabinet by the Commerce Ministry”.

This decision is crucial for all LNG projects in the country including the Dabhol power venture where negotiations are presently under way for firming LNG supplies for the project.