Following a major nationwide electricity shutdown that remains largely unexplained by the government, which is causing load shedding in winter of all seasons, it seems Pakistan’s energy woes are only going to get worse as the ongoing gas shortage is about to intensify in the coming months. High worldwide gas demand these winters, interruptions to supply in the three largest Liquefied Natural Gas (LNG) exporting countries and increased freight prices have caused spot prices of the commodity to skyrocket. Price of LNG has nearly tripled since early November last year causing suppliers who had confirmed cargoes for February to back out. Major international LNG traders, which include state-run entities as well, are amongst the firms that have defaulted on their bids, making any legal recourse all the more complicated.
The PTI, while in the opposition was severely critical of long-term bilateral contract the PML-N made with Qatar for LNG supply, terming it ‘overpriced’. Since it came to power in 2018, both former Prime Minister Shahid Khaqan Abbasi and his finance minister Miftah Ismail have been hounded by NAB, are out on bail after being jailed for months with allegations of corruption over signing the 15-year LNG deal that ensured supply at 13.37 per cent of Brent, a price much better than what the spot market is offering at the moment. Qatar sells around 60 million tons of gas per year of which Pakistan only buys around 3 million tons; therefore, to suggest that Qatar greased the palms of certain Pakistani politicians to secure the contract is simply absurd. The PTI, consumed by its aversion to LNG, did not attempt to install any new merchant LNG terminals in the past two and a half years, which would have increased capacity to meet the rising gas demand that the current two terminals are unable to, and for this it had offers from four of the largest companies to install the terminals. While there is nothing the government could have done to control prices of LNG in the spot market, it could surely have utilized the ample time it had at its disposal to plan ahead so that the damage that this gas shortage will do to the industry and in turn an already fledgling economy, could have been mitigated.
