By Muhammad Mudassar

ISLAMABAD, July 27: The government has been asked to improve the storage capacity of the liquified natural gas (LNG) so that the commodity could be provided to the industrial sector, especially the export-oriented industries, at cheaper rates and without any disruption.

Pakistan's two LNG terminals have the storage capacity of approximately 140,000 tonnes of LNG and regasification capacity of 1.35 billion cubic feet per day (BCFD).

It is to mention here that the Economic Coordination Committee of the Cabinet recently decided to raise the price of LNG for five export-oriented industries (jute, leather, carpet, surgical and sports goods) to $9 per million British thermal unit (mmBtu) in the fiscal year 2022-23 from $6.5 per mmBtu in FY2021-22 under the Regionally Competitive Energy Tariff.
Moreover, ECC has also raised the tariff of the indigenous gas to Rs1,350 per mmBtu for export-oriented industries and to Rs1,550 per mmBtu for general industries from Rs820 per mmBtu and Rs853 per mmBtu, respectively.

The major reason for jacking up the rates is the rising prices of energy products in the international market.

The government has set aside Rs20 billion subsidy on electricity supply and Rs40 billion on RLNG (Re-gasified-Liquified Natural Gas) in the budget 2022-23 for the five export-oriented sectors.

Talking to WealthPK, Junaid Ali, chief executive of a textile unit in the Sialkot industrial area, said energy was an important input for industries, especially the export-oriented sectors.

He said that the government should facilitate the industries, especially the export-oriented sectors, because exports significantly contributed to the country’s economy.

“The storage capacity of LNG should be increased in Pakistan with establishment of more LNG terminals at the Karachi port,” he said. Moreover, he said the government could sign more long-term contracts with LNG suppliers to ensure the availability of cheap LNG to the industry.”

In 2015, the first government-to-agreement was signed between the state-owned PSO and Qatar on a “take-or-pay” basis to procure 3.75 million tonnes of LNG per year at 13.75% of crude price. In 2021, Pakistan struck another long-term contract with Qatar for three million tonnes per year of LNG at a 10.5% of crude.

In total, Pakistan can import around 1,000 million cubic feet per day (mmcfd), 900 mmcfd and 100 mmcfd, respectively, under long-term contracts with Qatar. Besides, Pakistan also makes spot purchases, which is less than 15% of total LNG imports.

Pakistan is fast becoming an energy-deficient country as contribution of indigenous gas to the total primary energy supply has dropped to 33% in 2022 from 60% in 2005.

Oil and Gas Regulatory Authority forecast suggests that the country’s gas shortfall will be almost 4,000 mmcfd by 2030. This gas deficiency has resulted in a decline in electricity generation from 12.15% in July-April 2021 to 8.5% in July-April 2022.

Credits: INP-WealthPk