Private Firm Launches LNG Imports in Nepal

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Introduction to LNG in Nepal

Nepal has witnessed a significant development in its energy sector with the introduction of liquefied natural gas (LNG) by a private company, Yogya Holding. This marks the first time that LNG is being imported and supplied in the country. The process of converting natural gas into LNG involves cooling it to about minus 162 degrees Celsius, which reduces its volume by approximately 600 times, making it easier to store and transport. Once it reaches its destination, the LNG is re-gasified and delivered through pipelines.

How LNG is Produced

The production of LNG begins with the extraction of natural gas from underground deposits. Impurities such as water, carbon dioxide, and sulfur are removed during this process. Yogya Holding, a subsidiary of SG Group, has invested around Rs600 million to establish an LNG plant in Simara, Bara. The company started importing and distributing LNG from this plant a week ago.

SG Group has a long history of bottling and supplying liquefied petroleum gas (LPG) under various brand names across Nepal. The group also engages in manufacturing gas cylinders. According to Shiva Prasad Ghimire, chairman of SG Group, the plant was established with technical support from the Indian Oil Corporation and operates under the Indian Explosives Act.

Expansion Plans and Industrial Use

Ghimire mentioned that the company plans to expand its LNG plants to different parts of the country based on demand. In addition, Yogya Holding has already started supplying LNG to Bright Metal Industries, a nearby factory, through a pipeline. The metal factory has been operating using the LNG provided for the past week.

In the initial phase, the company focuses on importing and supplying LNG for industrial use. In the next phase, it aims to provide compressed natural gas (CNG) for vehicle usage. According to Ghimire, LNG serves as a clean, reliable, and cost-effective alternative to conventional fuels. By introducing these energy sources, SG Group contributes to reducing carbon emissions, improving energy security, and promoting a greener future.

Government and Private Sector Roles

The state-owned Nepal Oil Corporation has an agreement with the Indian Oil Corporation to import and distribute various fuels, including kerosene, diesel, petrol, air turbine fuel, and LPG. However, other products can be imported and distributed by the private sector, as noted by Ghimire.

He highlighted that the price of LNG is not costly given its efficiency. For instance, a kilogram of LPG burns for an hour, while LNG burns for 15 minutes longer. The customs duty on LPG is 5 percent, whereas it is 15 percent for LNG. Ghimire emphasized the need for the government to reconsider the customs duty on LNG to promote clean energy.

Pricing and Supply Chain

During the trial phase, discussions continue to minimize the cost of all components in the supply and distribution chain to determine the actual cost of LNG. The price will be reviewed every two weeks according to the international market. LNG is currently being imported from the Indian Oil Corporation on tankers. While the gas can be supplied through pipelines, the storage must meet international standards. It can also be bottled in cylinders for supply.

Applications of LNG

LNG is used as a fuel for electricity generation, transportation (ships, trucks, buses), and for residential and commercial heating and cooking. In industry, it serves as a fuel for power generation and process heat, as well as a raw material for products like plastics and fertilizers.

Environmental and Operational Benefits

LNG offers environmental benefits such as reduced emissions of greenhouse gases and local pollutants, making it a cleaner-burning fossil fuel. It also provides operational advantages, including increased energy density for transport, lower fuel costs, and greater energy security and reliability through diversified and global energy supply.

Import Statistics and Initial Consignment

According to the Department of Customs, Nepal imported petroleum products worth Rs326.14 billion in the last fiscal year. The country imported LPG gas worth Rs62.58 billion during the same period. According to The Hindu, an Indian newspaper, the initial consignment of LNG reached Yogya Holding's facility on November 19. This is the first part of a five-year deal between IndianOil and Yogya Holding to deliver 1,000 tonnes of LNG over the agreed period. The agreement was signed during the India Energy Week in February this year.

Source of LNG and Transportation

The LNG is sourced from IndianOil's Dhamra LNG terminal in Odisha and transported using cryogenic road tankers via the international border at Raxaul.

Photo: of HardeepSPuri via X

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