Pakistan’s energy crisis to worsen amid Russia-Ukraine conflict

INTERNATIONAL DESK: With the Covid-related supply disruptions and subsequent effects of the Russia-Ukraine conflict that exacerbated the situation, Pakistan’s energy crisis is set to worsen in the near future as the cash-strapped country struggles to procure liquefied natural gas (LNG) at an affordable rate.

This crisis comes as the spike in global energy prices has pushed Pakistan’s electricity fuel costs by more than 100 per cent. Last week, the state-owned LNG Ltd cancelled an expensive offer it has received against a tender for four cargoes of LNG for July shipments.

“Pakistan’s energy crisis is set to worsen over the next several weeks as it struggles to procure LNG at an affordable rate when little is available in an international market that has been sorely affected by the political fallout of the Russia-Ukraine war,” the Dawn newspaper said in an editorial.

Musadik Malik, Pakistan’s State Minister for Petroleum last week said the country’s failure to find a bidder for LNG slots had forced authorities to shift to alternative sources of energy for power generation, which would take a month or so to yield results.

“The situation is that we have carried out two rounds of tenders of three to four tenders each, but no one responded to them,” Dawn quoted Malik as saying

He made these remarks on the sidelines of a two-day conference organised by the Centre for Excellence in Journalism (CEJ) at the Institute of Business Administration (IBA).

“Since supply from Russia is suspended due to the war with Ukraine, European countries are also buying gas from everywhere it’s available. As a result, LNG, which was priced at USD 4 two-and-a-half years ago, is no longer available for even USD 40. So, Russia’s war [with Ukraine] created a real crisis,” he said.

The Dawn newspaper reported that the government plans to raise power tariffs by 47 per cent from July to recoup some of the losses being incurred on account of expensive fuel imports.

The report added that LNG prices in Pakistan have already gone up significantly in recent months, despite most cargoes coming from cheaper long-term contracts with Qatar owing to expensive spot purchases by the present government in April to meet the power demand.

The newspaper said the decision to reject the priciest LNG shipment was a prudent one.

Earlier this month, the state-run LNG Ltd (PLL) had floated a tender for four cargoes — one each in the first and second weeks, and two in the last week, of July. But no bidders came forward for the July 2-3, 8-9, and 25-26 delivery windows.

Notably, this was the third futile attempt to have an LNG cargo in the first week of July. The earlier two tenders attracted only two and one bidders but none was technically responsive. (ANI)