Pakistan Intends A U-turn On Fuel Imports Following A Spike In Prices

Pakistan will attempt to increase domestic energy sources instead of reversing a long-standing strategy to increase fuel imports, including liquefied natural gas.

Over the next ten years, the country won’t be developing any new power plants that use imported coal, LNG, or fuel oil, according to a representative of the energy ministry. Alternatively, the official, who asked to remain anonymous to discuss details that aren’t yet public, said, “it will look to increase its domestic power capacity, including solar, wind, locally-mined coal, hydro, and nuclear.”

The energy ministry of Pakistan’s spokesperson was not immediately available for comment.

Pakistan was especially vulnerable to shortages due to its reliance on imported energy and ongoing financial difficulties amplified by Russia’s conflict in Ukraine. It has frequent power outages and has had to ration fuel because it cannot afford rising LNG cargo prices.

In the year that ended in June 2022, Pakistan was able to meet a maximum power demand of 28.25 GW, which is more than 35% less than its power generation capacity of 43.77 GW.

Energy Minister Khurram Dastgir Khan told Reuters that Pakistan will increase its coal-fired power capacity by four times in the “medium term” and that due to rising costs, it no longer considers LNG imports to be a part of its long-term energy plan.

The adoption of domestic coal marks a sudden change for Pakistan, which over ten years ago, began importing gas to supplement its dwindling domestic supply. It started importing LNG from abroad in 2015 and has been among the markets with the fastest expansion for many years.

Over the past few years, the government of Pakistan has had difficulty obtaining LNG on the spot market due to rising prices and a lack of supply. Additionally, the country has avoided committing to long-term agreements that would have guaranteed deliveries in the future, raising the prospect of years-long shortages.

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Divya Rajput

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