KARACHI: The Pakistan LNG Limited (PLL), a state-owned entity mandated to procure and import liquefied natural gas (LNG) for the country, was “forced” to buy four LNG cargoes for more than $15 per million British thermal units (MMBTU), constituting the most expensive purchase of the commodity since Pakistan started importing it in 2015, said the energy ministry in a statement on Friday.
“The PLL Board was forced to accept the 4 LNG ‘spot’ tenders [at $15 per MMBTU] for September 2021,” the ministry said in an official statement.
Alternatively, it added, the country would have used furnace oil as the replacement fuel for electricity generation which would have raised the power prices by at least 20 percent in September.
The ministry maintained that diesel was yet another option, but it would have made electricity almost 50 percent more expensive.
After weighing different possibilities, the statement continued, the country decided to opt for “the lesser of the two evils.”
Pakistan procures about one-third of its LNG through spot trading while the remaining two-third is done through long-term contracts.
Earlier this year, the Pakistan Tehreek-e-Insaf (PTI) administration signed a long-term agreement with Qatar for additional 200 million cubic feet a day (MMCFD) of LNG, saying it had concluded the deal at about 31 percent lower rate than the Pakistan Muslim League-Nawaz (PML-N) government’s 2015 contract with Doha for 500mmcfd of gas.
Commenting on the two deals, the former finance minister under the PML-N administration, Miftah Ismail, said despite the government’s claims, people would pay a much higher price for the new LNG import.
“This month, the people of Pakistan will pay $8 per MMBTU for at least three LNG cargoes contracted by the PML-N government while the government is paying $15 for four cargoes,” he told Arab News.
“That is about $22.5 million per cargo,” he added. “Since the government is buying four cargos, it will be paying around $95 million extra.”
However, the energy ministry responded by saying that “no one, without a crystal ball, can perfectly time or beat an international commodity market.”
It added that Pakistan could opt of 100 percent long-term contract purchases as a matter of policy, though the mechanism would still not be without its "opportunity cost" since spot LNG prices could fall in the international market at any stage.
Pakistan 'forced' to buy expensive LNG to cut electricity cost — energy ministry
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Pakistan 'forced' to buy expensive LNG to cut electricity cost — energy ministry
- The country imported four liquefied natural gas cargoes this week at the highest rate it has ever paid since 2015
- Pakistan procures about one-third of its LNG through spot trading while the remaining two-third is done through long-term contracts
Pakistan PM invites UAE investment across tech and resource sectors at National Day event
- Shehbaz Sharif says the UAE remains a key economic partner and continues to lend ‘critical support’ to Pakistan
- UAE envoy says both nations have potential for cooperation in renewable energy, AI and economic diversification
ISLAMABAD: Pakistan is ready to welcome investment from the United Arab Emirates across emerging technologies and resource sectors, Prime Minister Shehbaz Sharif said on Monday, as both countries marked the 54th National Day of the Gulf country in Islamabad.
Speaking at the ceremony attended by senior ministers, diplomats and business leaders, Sharif said the UAE remained a key economic partner for Pakistan and continued to lend “critical support” to the country’s stabilizing economy.
“Pakistan takes great pride in its strategic partnership with the UAE, which continues to deepen across every domain of life,” he said. “With Pakistan’s economy stabilizing, we stand ready to welcome Emirati investment in renewable energy, AI, fintech, agriculture and minerals.”
Sharif praised the UAE’s leadership and recalled his earliest memories of the Gulf nation as “a land that believed in possibilities long before they became realities,” saying the country’s progress under President Sheikh Mohamed bin Zayed Al Nahyan commanded “profound admiration.”
UAE Ambassador Salem Al Bawab Al Zaabi said the Emirates was committed to strengthening ties with Pakistan in areas including the economy, energy and artificial intelligence.
He said the two countries shared a “deep-rooted friendship built on mutual respect, shared values and a common vision for regional peace and development.”
“We see tremendous potential for collaboration in renewable energy, artificial intelligence, sustainability and economic diversification,” the ambassador said, adding that the UAE aimed to broaden the scope of its economic relations with Pakistan.
The UAE hosts around 1.8 million Pakistani expatriates, one of the country’s largest overseas communities, who Sharif said contributed “tirelessly” to the Gulf state’s development.
Sharif and Deputy Prime Minister Ishaq Dar also joined the UAE ambassador in a cake-cutting ceremony to mark the occasion.
