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Saturday, April 13, 2024

Power crisis intensified: Are we heading towards stone age?

Failure to reach an agreement on natural gas supply for next month has intensified power shortages and consumers are going to suffer

Country’s power crisis has intensified after failing to reach an agreement on natural gas supply for next month. According to experienced traders, Pakistan LNG Ltd. did not accept the tender for July for the purchase of Liquified Natural Gas (LNG) as that would have been the most expensive shipment received by the country.

Alarmingly, this is that third time in this month that the country could not complete tender for July. This inability of the country is a serious threat to aggravate the electricity shortages as electricity consumption is higher due to harsh weather conditions.

Read more: Power outage stops work at Sindh High Court

To respond to the questions about the LNG tenders, an official from Pakistan’s energy ministry said, “We are adopting an alternative strategy.” He claimed that Pakistan is not currently experiencing fuel shortage. In case of emergency, the country can alter supplies to high-priority sectors like power generators.

Notably, federal, and provincial government is attempting to promote energy conservation. It has reduced working hours for government employees and ordered shopping malls to be closed early. Likewise, State Bank of Pakistan has also introduced energy conservation drive for banking sector and has also directed banks to prepare their own conservation plan which will be followed from 1st July, 2022. Also, Prime Minister, Shahbaz Sharif promised to take further steps to end blackouts.

LNG prices have risen as Europe increases imports of the super-cold fuel amid growing fears that Russia will cut pipeline gas supply. Power cut at a key US export facility has resulted in additional tightness.

According to data by prepared by BloombergNEF, last year, Pakistan purchased nearly 50 percent of its LNG on the spot market. The tender, which ended on Thursday, got an offer for just one of the four cargoes sought, and was priced at nearly $40 per million British thermal units, nearly quadruple the rate Pakistan paid a year ago.

Read more: Qatari LNG bid: Opportunity or another challenge?

Expensive fuel imports are beginning to affect consumers as Pakistan keeps raising domestic prices to meet a key condition for obtaining bailout from the International Monetary Fund. The government requires at least $41 billion to deal with the economic crisis in the country.