Saturday July 13, 2024

Pakistan to seek Qatar’s consent for selling excess LNG

By Israr Khan
June 30, 2024
A file photo of a liquefied natural gas (LNG) tanker. — AFP/File
A file photo of a liquefied natural gas (LNG) tanker. — AFP/File

ISLAMABAD: The government is set to approach Qatar for its consent to sell LNG cargos imported from the Gulf state on the spot market if domestic demand is low, a senior official from the Ministry of Energy disclosed on Friday.

The senior official made this revelation during a public hearing held on Friday by the National Electric Power Regulatory Authority (Nepra) regarding a petition by power distribution companies seeking permission to collect an additional Rs3.41 per unit from consumers due to fuel adjustments for May 2024.

In 2016, Pakistan signed a long-term LNG supply contract with Qatar, with a price revision due in February 2026. Under the deal, Pakistan State Oil (PSO) is obligated to take supplies regardless of domestic demand, causing pipeline issues for Sui Northern Gas Pipeline Limited (SNGPL) when the utility fails to consume the gas.

Officials reported that Pakistan is preparing to approach Qatar through diplomatic channels, seeking either to cancel shipments or sell them on the spot market if domestic demand for LNG falls short.

During the hearing, power distribution companies noted that the actual fuel rate was Rs9.12 per unit, compared to a reference price of Rs5.7 per unit, resulting in an increase of Rs3.41 per unit. They also reported a 5.0 per cent drop in electricity consumption due to weather conditions, with total demand in May 2024 being only 17,000MW. More electricity was produced using LNG rather than coal, with the cost of LNG-based electricity standing at Rs24.7 per unit.

Officials explained the necessity of forecasting LNG demand months in advance, noting that unexpected drops in power-sector consumption can lead to increased line pack for gas utilities.

The hearing also revealed that the share of net metering in the total energy mix was less than 1.0 per cent. Intervenors accused the Power Division of propaganda to discourage net metering by emphasizing its minimal share. They claimed that net metering users were consuming more electricity from the national grid at night, suggesting that criticism against net metering was baseless.

Intervenors questioned Nepra’s role in providing relief over the last five years and criticized it for depriving power consumers of the option to pay bills in instalments. They also raised concerns about a coal scam at the Sahiwal coal power plant; cases lost by the central power purchasing agency (CPPA) in international courts; and the rising circular debt in the power sector.

The Central Power Purchasing Agency (CPPA), presenting the case on behalf of distribution companies, declined to address these questions, saying that they were not relevant to the public hearing and requested the intervenors to submit their queries in writing.