Decision to import $2 billion worth of LNG delayed

Fear of gas crisis, Cabinet Committee has not yet approved import of cargoes

Islamabad: Government has so far delayed decision to import liquefied natural gas (LNG) worth about $2 billion to meet rising demand for gas in winter, although Petroleum Division had recommended starting import process in first week of October to ensure uninterrupted supply of gas and avoid public unrest due to possible shortage.

According to officials, Cabinet Committee on Energy has not yet considered gas load management summary presented by Petroleum Division, in which permission was sought to import total 22 LNG cargoes.

Some of these cargoes were also proposed to be obtained from America and Azerbaijan.

Petroleum Division had prepared this summary last month after consultation with Power Sector Reforms Task Force and National Coordination and Management Council. Under plan, arrangements for import of 12 cargoes were to be started by October 7 to 10, however no formal decision could be made despite passage of deadline.

Petroleum Minister Ali Pervez Malik said that matter is awaiting decision of CCoE. Prime Minister has also chaired meetings to determine gas needs and import quantity.

Government was expecting to receive at least 11 LNG cargoes from Qatar under long-term agreement, due to uncertain situation in Middle East, Qatar has extended force majeure period till November, due to which there is fear of scheduled gas supply being affected.

According to officials, although there is agreement on need to import 22 cargoes, however one opinion is also that only 15 cargoes should be imported.

According to experts and relevant officials, in this case gas shortage may intensify further at peak of winter.

According to government official, heavy cost of imported gas is major reason for delay in decision. Due to average cost of $87 million per cargo, about $2 billion will be required to meet gas needs from November to February.

Government initially estimated cost of importing LNG at about one and a half billion dollars, which included estimate of obtaining gas from Qatar at about $12 per million British thermal units, however, due to uncertain supply from Qatar, possibility of buying expensive gas from spot market has increased now.

According to report, total foreign exchange reserves of government are slightly more than $21 billion, government also obtained $3 billion loan through Euro bonds, after which large loan repayment of same value is due.

According to report of Economic Affairs Division, during July to September Pakistan received $4.5 billion in external loans, including Euro bonds.

Due to limited financial support from other sources, arrangement of resources for import of LNG has become important challenge.

Petroleum Division has recommended that continuous supply of gas to domestic consumers from 5 am to 10 pm be ensured on priority basis and appropriate pressure be maintained during cooking times.