ISLAMABAD: Pakistan has floated a tender for the purchase of three LNG cargoes from the spot market to meet rising electricity demand due to supply disruptions and high oil prices caused by the US-Israeli conflict with Iran. The state-owned Pakistan LNG Limited (PLL) on Thursday issued urgent tenders to import three LNG cargoes from the spot market for delivery between April 27 and May 8, amid surging temperatures and electricity shortfall.
Tender Details
“Bids are invited from reputed international suppliers, for the supply of three (03) LNG cargoes on a Delivered Ex-Ship (DES) basis at Port Qasim, Karachi, Pakistan,” the advertisement stated. This marks the first spot tender for liquefied natural gas (LNG) floated by PLL since December 2023.
PLL has invited bids for three LNG cargoes of approximately 140,000 cubic metres each, with delivery windows of April 27-30, May 1-7, and May 8-14 on a DES basis at Port Qasim. The deadline for bids is April 24, with bids to be opened the same day.
Background and Urgency
Pakistan LNG Limited, a subsidiary of Government Holdings (Private) Limited (GHPL) owned by the government, has the mandate to procure LNG to meet the country’s gas requirements. Earlier, the Power Division had sought four LNG cargoes to meet rising electricity demand, warning of increased load shedding and generation costs if the imported fuel is not provided.
The Power Division wrote a letter to the Petroleum Division requesting LNG for power plants. As temperatures surge across the country, the gap between electricity demand and supply has widened, pushing the government to arrange cheaper fuel to avoid expensive generation through high-speed diesel (HSD) and furnace oil.
According to the letter, LNG supply has become critical, and if not supplied, load shedding could increase. Without LNG, power generation costs are expected to surge, and load shedding hours will increase. The letter asked the Petroleum Division to arrange LNG cargoes from Qatar under a long-term contract.
Market Impact
However, the plan did not materialize, leading PLL to float tenders for procurement from the spot market. If LNG is not supplied, expensive diesel will have to be used for power generation to meet rising electricity demand. The costly diesel will raise the cost of electricity generation, and there are concerns that using diesel will increase the fuel charge adjustment burden on consumers.
The federal minister for the Power Division had last week stated that the country has enough diesel, but it will cost over Rs100 per unit. RLNG is deemed extremely important for electricity generation, with 6,000 MW of RLNG-based power currently installed in the country.
The US-Israel war with Iran has disrupted the supply of LNG from Qatar, further complicating Pakistan's energy situation.
