Pakistan's Energy Crisis Worsens as Gov't Fails to Finds Bidder to Supply Natural Gas Before 2028

Pakistan Prime Minister Shehbaz Sharif has said that the European countries are purchasing most of the gas supplies available on the market, leaving Pakistan with no source of energy. Similar concerns about difficulties experienced by the ‘Global South’ in meeting their energy demands have been voiced by Indian Foreign Minister S. Jaishankar.

Islamabad has failed to find even a single bidder in response to a tender floated by Pakistan LNG Limited (PLL) for supplying liquefied natural gas (LNG) between 2023 and 2028, as per an official document.

As per tender documents, the PLL had in August invited bids for the supply of 72 units of LNG cargo starting in January next year. Under the terms of the tender, the government agency said it wanted to import 140,000 cubic meters of LNG every month for six years. The results of the bid were published on Monday.

A tender for procuring 10 cargoes of LNG floated by the Pakistani government in July had also failed to attract even a single bidder.

The latest development comes against the backdrop of an ongoing energy and economic crisis in the South Asian country, which is grappling with power shortages owing to a shortfall in energy supplies spurred by high prices and a surge in demand in the European countries.

Pakistan has also been facing the problem of depleting forex reserves and is awaiting the disbursement of $1.17 billion from the International Monetary Fund (IMF) after reaching a staff level agreement (SLA) in July.

Billions of dollars in aid are also awaited from other countries such as Qatar, Saudi Arabia and the UAE, the authorities have said.

S&P Global said last month that power shortages have been exacerbated by unprecedented flooding, as major grid stations have been endangered due to the climate disaster and connectivity options have been disrupted.

Before the floods struck in June-July, Pakistan was already reeling under high energy import bills, which had surged 91 percent to $4.98 billion on a year-on-year basis as of the end of the financial year in June, as per the Pakistan Bureau of Statistics.

A report by Institute of Energy Economics and Financial Analysis (IEEFA) has said that energy import bills could increase to more than $32 billion by 2030.

The global surge in energy prices has largely been blamed on Western sanctions against Russia in the wake of the eruption of Ukraine crisis, with many European countries looking for alternatives to Russian energy.

As the EU seeks to draw down its reliance on Russia, which has been EU’s primary supplier of gas, many EU countries have ramped up their imports from other countries such as Qatar, another major producer of natural gas.

In many cases, the richer EU nations have been offering better rates for sourcing energy than the developing countries.