Pakistan is facing a hike in power crisis as it failed to agree on an agreement for LNG supply next month. LNG tenders for July were scrapped due to high prices as the country is already taking measures to handle the widespread blackouts.
State-run Pakistan LNG Limited (PLL) scrapped a procurement tender for July consignments of liquefied natural gas (LNG) when it received a proposal that would’ve been the most overpriced consignment ever delivered to the state, according to traders.
Meanwhile, Petroleum Minister Musadik Malik has notified about the power load-shedding in July and gas shortage in the coming winters in the country.
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Unfortunately, this is the third time in June that Pakistan did not complete an LNG tender for July, and the country’s failure to buy fuel further threatens the exacerbate electricity shortages as hot intense weather boosts air conditioning and power demand.
Currently, Pakistan does not have a fuel shortage, he said. The country can divert supplies to high-priority sectors like power generators in emergency situations.
He added that the government is struggling to increase energy conservation, has already cut working hours for public servants, and directed shopping malls to factories to shut early in different cities including Karachi. Prime Minister Shehbaz Sharif, however, pledged to take more effective steps to terminate blackouts.
Moreover, LNG prices have increased as Europe hikes the imports of super-chilled fuel among growing concerns that Russia will cut pipeline gas supply. An outage at a crucial US export facility has resulted in further tightening.
The tender closed on Thursday and attracted a bid for only one of four shipments being sought, costing worth $40 million British thermal units, approximately quadruple the rate Pakistan paid last year. Pakistan refused the high-priced LNG offer.
Criticizing the former government for not purchasing liquefied natural gas at cheaper prices, Musadik Malik said, “Two years ago, LNG was available in the market at a cheaper price of $4, but the previous government wasted the opportunity and did not make a long-term agreement and now it’s not even available at $40.”
