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January 22, 2021

Continuing problems

Editorial

 
January 22, 2021

While the issue of LNG purchase has been brought up again and again, the issue of supplying gas to the country for March 2021 continues. Already, we have a situation where domestic consumers are being forced to cook on fuel like wood, or purchase expensive gas cylinders with LPG in order to meet household needs while industrial production is suffering greatly and so delivering a severe setback to the country's economy. It has now been found that Pakistan has been offered gas for the month of March only at higher prices compared to those available to other nations. While the price of gas is now going down in the market, Pakistan is uncertain as to whether it should re-tender, given that this might create greater uncertainty in the market and it may not receive the offers it hopes for. The present situation however, is bleak. In the first place, one major company has pulled out of supplying gas for the end of February, leaving Pakistan in a lurch. There were also rumours that the Azerbaijani company SOCAR was also planning to pull out but fortunately it did not do so and has said it will honour its commitment.

However, the gas that is available comes at about 17 percent for the later part of March – prices that are high. This means more resources would have to go out of the national exchequer and Pakistan is barely in a position to afford this. The problem arises partly at least as a result of poorly managed gas purchases over the year and notably for the winter months when gas is most in need all across the country and temperatures fall to below zero in many parts of the north. It has been argued that buying gas in summer, when it had reached record lows, would greatly help the country, but for reasons that are still unclear this was not done. The present problem is however one that will have to be dealt with. Pakistan is hoping to open tenders for February and see if any of these allow gas to be carried over into March. However, it seems unlikely given past history that this will prove possible. Its planners must then decide what should be done. Putting in new tenders at this stage – when prices are somewhat lower than before – may bring it benefits. But then, on the other hand, harm may also be caused if companies do not deliver the gas that is required. This would obviously serve as a huge setback to a country that is desperate for gas to keep its homes and industries running and supplying to the markets.