Qatar wants GST extended to natural gas

Speaking at Petrotech conference in New Delhi on Sunday, Qatar Gas CEO Khalid Bin Khalifa Al-Thani said India is a very important market for Qatar.

Qatar supplies 8.5 million tonnes o LNG to India annually, which is about 40 per cent of all overseas LNG shipments reaching India.

"LNG should be considered to get full benefits of GST," he said. "We would be working closely with the government".

"If there is change in demand worldwide we will see it in India especially in fossil fuel," he said.

He said the country needs to build infrastructure so that clean fuel can reach all corners.

Qatar is the second big foreign investor to seek GST on petroleum products. In October last year, Russian oil firm Rosneft, the biggest foreign investor in India's energy sector, had criticised the country's taxation policy, saying it was a major hurdle in its expansion plans.

Rosneft and its partners had in August 2017 completed a $12.9 billion acquisition of Essar Oil to enter the world's fastest-growing energy market. 

The company will, however, have to pay a 20 per cent withholding tax even after paying corporate tax and dividend, Rosneft's first vice-president for economics and finance Pavel Fedorov had said.

Fedorov said the company was also not able to claim credit of tax it pays on inputs in its Vadinar refinery in Gujarat. 

While the Goods and Services Tax (GST), which unified over a dozen central and state levies, came into effect from 1 July 2017, five petro goods — crude oil, natural gas, petrol, diesel and aviation turbine fuel (ATF) — were kept out of it.

This means the tax, a user of natural gas pay on inputs cannot be offset by taxes paid at consumption end. State-owned gas utility GAIL India Ltd Chairman B C Tripathi, speaking at the same session at Petrotech, too favoured to bring natural gas under the ambit of GST, saying it is a low hanging fruit.

Also, power plants must start using natural gas as it would be difficult to achieve the target of raising the share of natural gas in the energy basket to 15 percent by 2030 from current 6.2 percent.

Al-Thani said natural gas demand worldwide is expected to grow at the rate of 1.5 percent through 2035 and LNG demand is projected to grow by 4 percent to 600 million tonnes from 290 million tonnes in 2017.

Qatar, he said, will raise LNG production capacity to 110 million tonnes by 2023 from current 77 million tonnes.