(Image Courtesy: Petronet LNG)

 

 

Trading, pricing and taxation of Liquefied natural gas (LNG) are grabbing eyeballs across the globe in spite crude price fall-led commodities slump. 

Both LNG importing and exporting nations have either crafted or are preparing strategies to make the best out of expanding global LNG market. 

“The age of the current LNG market is just dawning,” says Japan, the world’s largest LNG importer in its LNG strategy announced in May 2016. The strategy lists both internal and global reforms to make LNG markets competitive and fair to all stakeholders. 

European Union (EU) too is gearing up to shape global LNG market to beef up its energy security.

“A larger and more liquid global LNG market presents an opportunity for the EU. However the globalisation of the LNG market also has an important foreign policy dimension: as a major importer of LNG (the second largest after Japan), the EU has a keen interest in promoting free, liquid and transparent LNG markets around the world,” says European Commission’s (EC’s) strategy for LNG and gas storage unveiled in February 2016. 

According to International Gas Union's (IGU’s) World LNG Report 2016, total LNG trade reached 244.8 million tonnes in 2015, up 4.7 MT from 2014. The decline in oil prices and growing weakness in Pacific demand led all global LNG price markers to fall in 2015, from an average $15.60/MMBtu in 2014 to $9.77/MMBtu in 2015.

“I do not want to criticize a neighbouring country but I submit that energy in Pakistan is spent in disputes and clamours instead of work. If she had done even one fourth of what India is doing she would have made sufficient progress.”

This ever-green truth about Pakistan articulated by late Jawaharlal Nehru on 13th July 1954 is more relevant today. It shows as pain & misery in every sphere of its relationship with its forbearing parent, India. 

And a notable case of such contrived discord is bilateral trade, whose potential as deliverer of prosperity & peace in the region including Afghanistan has been sabotaged by Pakistan. India’s bilateral trade with Afghanistan is stunted by Pak’s denial of transit for Indo-Afghan bilateral flow of trade through its territory. 

Afghan Pakistan Transit Trade Agreement (APTTA) does not permit India to transit goods through Pakistan for export to Afghanistan, according to WTO Secretariat’s Trade Policy Review Report on Pakistan issued during June 2015.

With Modi Government set to review grant of most-favoured nation (MFN) to Pakistan, it is first important to shatter a myth. 

Certain top-notch institutions, TV channels and dailies have wrongly claimed that India granted MFN status to Pakistan in 1996 after formation of World Trade Organization (WTO). The fact is that India granted MFN to Pakistan decades earlier under General Agreement on Trade and Tariffs (GATT). The first MFN dispute between the two was in fact raked up by Pakistan in 1948! More on this issue later in this column.

 (Edited Image Courtesy: ICMAI)

 

“Cost accountants are engaged in a much more difficult and complicated kind of task, a task in which the country is much more interested. In the other case, it is a question of shareholders not being defrauded or the owner of a concern knowing that his accounts are correct or the Government getting the income-tax properly; otherwise, the amount may be incorrect. But in this case, the matter concerns the whole country. It affects our whole economic development. An industry should have the lowest cost of production so that its products may be able to compete in the world markets and in our own markets also. So, this subject of cost and works accounting is very important. It is a very advanced and specialised branch and it should be treated separately. There is no doubt about it. I am also glad that the Government has now taken the trouble of organising it into a Separate body and setting up a new Institute of Cost and Works Accountants.” 

That was Parliamentarian Dr. P.J Thomas sharing his vision for cost audit as omnipotent facilitator for economic development while participating in a debate on the Cost and Works Accountants Bill, 1958 in Rajya Sabha on 10th December 1958. 

Another MP, R.P. Sinha struck a similar chord. He stated: “it is not enough to have cost accounting on the whole, but, Sir, it is important that we should have cost accounting, as explained by the previous speaker, for every stage of production. Then alone we can have a correct appraisal both of the productivity of labour and of management.”

This perspective, which didn’t get requisite attention in the past, is more relevant today. Cost efficiency is vital for success of Modi Government’s ‘Make in India’ initiative. It has been launched to reverse the alarming decline in share of manufacturing in gross domestic product over the last 20 years.

Post economic reforms beginning mid-1991, many companies stopped production or went of business as they realized that they were not cost competitive against imports. Low-cost imports of components, sub-assemblies and finished products became the liberalization-age mantra.