In an era of deregulation and dismantling of the government-dictated pricing system, Power Minister Anant Geete wants the Centre to regulate the otherwise free liquefied natural gas imports, its pricing and the quantity and place of import.
Commenting on the proposed Integrated LNG Policy, which provides for fiscal incentives to make the imported fuel cheap, Geete has written to Petroleum Minister Ram Naik that the government should fix a ceiling for the cost of import of LNG.
He further wants the government to decide on the location of LNG import terminals and LNG purchase contracts, sources said.
"Since it might take a few years before the gas/LNG market matures in terms of demand and supply, as also in terms of number of players in the field, it would be imperative that gas/LNG business is appropriately regulated.
"Only after the market matures, the role of regulation in terms of pricing would gradually reduce and market forces will take over," Geete has written.
The petroleum ministry has moved a Cabinet note on Integrated LNG Policy that provides infrastructure industry status to LNG import and regassification terminals, zero import duty, income-tax holidays and a uniform rate of four per cent sales tax across the country.
While the fiscal incentives would cut delivered cost of LNG, public sector Petronet LNG Ltd, which will be the first firm to begin importing gas early next year, has already cut costs at its end to make the delivered cost of imported fuel comparable to the highly subsidised domestic gas.
