Uncertain geo-political situations, adverse effects of climate change, domestic gas supply shortage of ~1300 MSCF per day and skyrocketing imported LNG prices are major challenges being faced by energy sector of Pakistan. These challenges are unbalancing energy equation of the country resulting huge dent to national economy in terms of increased electricity and gas tariffs for all consumers.

The share of LNG in Pakistan's energy mix has been steadily increasing since LNG was first imported in 2015. In 2018, this share is increased from 5.6 % to 8.7 % in 2019 respectively. The prime purpose of LNG import was to expedite shift from utilization of expensive furnace oil for power production. The power sector consumes the 18 % of LNG imports, followed by general industries and the fertilizer sector, which are utilizing it both as feed and fuel stock.

In terms of price benchmark in 2019, LNG import prices ranges from $7 - $10 / MMBtu and decreased to less than $2 / MMBtu in 2020 whereas, LNG price hike witnessed in October 2021 with single shipment selling as high as $ 56 / MMBtu. Pakistan, which sources more than half of its LNG from spot markets, had to face this price increment around $30 / MMBtu. The procurement on hiked prices and timely non-availability of LNG denting country's economy in the form of hyperinflation, energy shortage and food insecurity. In order to balance national energy equation, government of Pakistan is proposing for installation of more LNG terminals but at the same time, high spot prices of LNG are having direct impact on the cost of power production when LNG is utilized as a fuel. For instance, in last winter season, fuel costs allocated for LNG power plants was as high as USD 0.088 / KWh, while the cost of electricity generation from solar and wind energy stood at USD 0.033 / KWh which is clear depiction of feasible solution for meeting national energy demands. In current scenarios, diversion of attention and financial investments towards renewable energy sector of Pakistan is pragmatic solution for overcoming national energy shortage.

You can access this article if you purchase or spend a download.