KARACHI: The import volume of liquefied natural gas (LNG) doubled in the first 10 months of 2016-17, increasing the overall petroleum bill by 25 per cent.
The import of LNG may have eased the gas shortage. But the rising arrivals of other petroleum products and crude signal that the import bill will balloon further in coming months.
Pakistan signed a long-term agreement with Qatar for LNG imports to address the gas shortage and generate electricity.
The agreement was signed in February 2016 with the assurance from Qatar that it would provide Pakistan with LNG worth $1 billion annually. The deal was criticised for lack of transparency as the government did not initially furnish pricing and other details. However, LNG imports have yet to reach $1bn.
In the first 10 months of 2015-16, LNG imports were worth $443 million. They doubled to $965m in the same period of the current fiscal year, which suggests the annual import bill may touch $1bn. The LNG import bill was $579m in 2015-16.
It was reported that the annual contract quantity for 2016 was 2.25 metric tonnes while the price of each cargo was 13.37pc of Brent.
A recent report by the State Bank of Pakistan reveals that the oil import bill has been increasing despite lower oil prices in the international market. It rose 25pc to $8.64bn in the first 10 months of 2016-17.
In view of a persistent electricity crisis and upcoming elections, the government is under pressure to increase power generation and improve the distribution network. The PML-N government promised to eliminate loadshedding with the help of LNG-based power plants when it came to power in 2013.
The power crisis persists despite the government’s efforts to close the 6,000-megawatt generation gap by doubling LNG imports.
The government claimed LNG-based electricity would cost 9.50 US cents per kilowatt hour (kWh) compared to 18 US cents per kWh of diesel-based electricity. However, the impact of the reduced cost of electricity was not passed on to consumers.
Electricity produced through local gas costs approximately 7.50 US cents per kWh.
Published in Dawn, June 4th, 2017
