Power crisis: Pakistan's request for LNG fails, not a single offer received

The ongoing energy crisis in Pakistan is likely to continue after the country’s purchaser of Liquefied Natural Gas (LNG) failed to receive a single offer for its latest tender, reported Bloomberg on Thursday.

Just days ago, Pakistan LNG Limited (PLL), a wholly-owned subsidiary of Government Holdings Private Limited (GHPL), invited bids for ten LNG cargoes from international suppliers during the July-August-September window.

Suppliers were asked to submit bids by July 7. As per PLL documents, each cargo was to have a volumetric quantity of 140,000m3.

However, in an unusual development, the state-owned LNG purchaser did not receive a single offer in a $1 billion LNG purchase tender, said the Bloomberg report, citing traders with knowledge of the matter.

“That illustrates both the extent of the global fuel shortage, and also the reluctance of suppliers to sell to a country in the depths of an economic crisis,” said the report.

Global supply-chain disruptions owing to the Russia-Ukraine war have led prices of energy commodities including LNG to skyrocket.

On the other hand, Pakistan is dealing with fuel shortages, particularly in its power sector, as electricity consumption spikes in the summer months, leading to power outages across the country.

In a presser on Wednesday, Federal Minister for Power Khurram Dastgir said that 969MW Neelum-Jhelum hydropower project was closed due to malfunction and the reasons of the plant’s closure are being determined.

Moreover, the government has also decided to form an inquiry commission to determine the causes of the energy crisis in the country.

Last month, Pakistan LNG Ltd (PLL) received a single bid from Qatar Energy at $39.80/mmbtu for an LNG import tender seeking a cargo in the July 30-31 window. It received no bids for three other deliveries sought in July.

Pakistan had sought four cargoes from international suppliers during the windows of July 3-4, 8-9, 25-26 and 30-31.

However, Prime Minister Shehbaz Sharif last week informed that the country scrapped the LNG tender for July to save the country's foreign exchange reserves.

Pakistan's foreign exchange reserves did receive a boost last week, as the country’s total liquid foreign exchange reserves rose sharply by some $2 billion, supported by the arrival of Chinese inflows.

During the week ended on 24 June, 2022, the SBP received proceeds of Chinese Development Bank loan amounting to RMB 15 billion, which was equal to $2.3 billion. After accounting for external debt repayment, SBP’s reserves increased by $2.071 billion to $10.309 million, up from $8.238 billion a week earlier.