Government major beneficiary of LNG import terminal?

The major beneficiary of LNG import terminal in terms of financial benefits has been the government as well as its agencies, plucking one-third of overall revenue of LNG terminals on account of taxes and fees, etc. On Tuesday, Chief Executive of M/s Engro was also in the federal capital to call on Prime Minister Imran Khan and inform him about the issues being faced by his firm. However, there was no confirmation about the meeting till filing of this report.
According to an official of LNG industry, the LNG terminals are wrongly being dubbed by some sections as money machines. The government agencies and state-owned entities (SOEs) have been a major beneficiary of LNG imports in terms of financial benefits by receiving duties, taxes, port charges and other fees.
Out of approximately $1.5 billion revenue of the LNG terminals, the terminal operators pay back about one-third or nearly $ 0.45 billion of revenue to the government in the shape of port royalties, duties and taxes on the FSRU and other plant, equipment and machinery, and other government levies.
Sharing details of the LNG terminals'' revenues and expenses, sources in Petroleum Division confirmed that the lease of an FSRU is about $ 0.75 billion and shore side facility costs $ 0.13 billion for over 15 year period. Consequently, a hefty amount of all revenue of terminals actually goes back to government or for covering expenditure of this huge facility over the 15 years of period of the contract.
Industry sources claim what management of terminals collects from the government in terms of capacity charges and tolling fee, a sizeable chunk of this amount is returned to the government and port authorities on account of taxes and charges.
Insiders claim that establishment of new energy terminal, particularly, has increased revenue earning of PQA, especially LNG imports have led to a major jump in the earning of the Authority in the recent years, making it financially strong. In 2018, approximately 88 LNG vessels arrived at the PQA which is roughly 5.5 per cent of the PQA channel traffic but earned the authority significant revenues. Since the advent of LNG consignments at the PQA in early 2015, according to an estimate, the PQA has collected around $ 145 million as total port charges on LNG carriers.
In addition to this, the government also considers import of LNG a source for increasing its tax collection. In the budget 2019-20, five per cent customs duty and ten per cent federal excise duty have been imposed on import of LNG. Moreover, customs duty and sales tax have also been levied on import of floating storage and re-gasification unit (FSRU).
In addition to submitting huge revenue to the government, financial benefit to consumers of re-gasified liquefied natural gas are said to be in billions of rupees per year.
Pakistan has saved over $ 3 billion since the start of this LNG imports through port terminals. It leads to replacing the import of more expensive furnace oil and other competing fuels with LNG.
The import of LNG has also revived the fertilizer sector, CNG sector and 500 plus industrial units by ensuring consistent supply of gas via LNG import. Parts of Punjab could potentially be shut down if there is no LNG import in the country.