LNG purchase

The problem that the PTI government has consistently run into regarding the purchase of gas at the right time and for the right duration continues. While the government has attacked the former PML-N government for signing long-term contracts, which it said tied it down and prevented it from purchasing gas at times when the rate was lower, the fact is that gas has not been purchased by the current setup at a time when it was at a far lower rate than currently is the case. Now that it has risen by nearly 80 percent or more, purchases are being made on a per cargo basis. The purchase of expensive LNG, which will lead to the production of electricity at a higher rate than that produced by furnace oil, means that consumers will be paying additional money for electricity at times when they require it most. This problem has been a consistent one with the current government which failed to purchase gas in time through last year, and particularly failed to purchase long-term gas supplies at the height of the Corona crisis, when it was available at some of the lowest rates the commodity has ever hit. Instead, purchases were made at a time when gas prices had risen sharply and gas was in short supply due to the global demand for gas in the winter months. For some weeks in the winter of 2020 and 2021, Pakistan was in fact unable to purchase any gas at all.

To complicate matters even further, the government has claimed that the country has saved an amount of Rs2.1 million through its clever tactics in the purchase of gas. It also says details of contracts cannot be disclosed. But the figures available show that billions have been lost because of poor tactics in purchasing gas supplies and securing them in advance for longer periods of time during periods when rates are low. This despite the fact that Pakistan has two LNG terminals with the capacity to store gas and use it at times when it is needed. There are also multiple allegations that the prime minister is kept misinformed about this matter. And that the true scale of the problem has not been put forward. We saw errors made in the purchase of gas during 2018, 2020 and now again we see the same pattern being followed in 2021.

Pakistan cannot afford to pour billions of rupees down the drain because of poor decision-making. Pakistan Energy Limited and Pakistan State Oil have both asked for the government to put forward its demand in time so that supplies can be secured. This has not happened and the purchase of gas one cargo at a time on spot rates has proved to be far costlier than the long-term contracts signed by the previous government, which ensured a consistent supply of gas to run the power plants and meet the other needs of the country.