Amir Saeed

Pakistan's gas crisis has worsened due to RLNG mismanagement, highlighting the urgent need for reforms and strategic planning to ensure energy stability.

Talking to WealthPK, Dr Khalid Waleed, an energy expert, said that the ongoing gas crisis in Pakistan is becoming increasingly severe, primarily due to the mismanagement of imported re-gasified liquefied natural gas (RLNG) and a declining demand for power. He highlighted that RLNG power plants are designed to function primarily during peak-load periods, especially in summer.

“However, long-term contracts with suppliers like Qatar necessitate that Pakistan offload all incoming RLNG shipments, despite lacking adequate storage facilities. This results in increased pressure on gas pipeline networks when electricity demand drops, necessitating a re-evaluation of RLNG contracts and the urgent development of storage infrastructure to stabilise energy policy in the long run.”

To address these challenges, Waleed emphasised the need for a strategic shift in economic planning that prioritises industrial growth and enhances electricity demand. “By connecting industries with captive power plants, Pakistan can stimulate economic activity and increase grid demand. The transition to net metering in the residential sector further underscores the importance of integrating industrial demand into the national grid.”

Talking to WealthPK, Aatizaz Hussain, a development economic researcher at National Defence University, Islamabad, pointed out that the government's handling of LNG imports has intensified the crisis. “The diversion of costly LNG to domestic consumers during winter months has provided temporary relief but has led to significant financial repercussions.”

“Gas distribution companies are unable to recover the full costs from consumers, resulting in massive debts that have crippled their financial health and severely impacted Pakistan State Oil (PSO), which is responsible for LNG imports. This mismanagement has contributed to a circular debt crisis within the gas sector, ballooning to alarming levels,” Hussain pointed out.

He lamented that the repercussions extend beyond state-owned entities; local exploration and production (E&P) companies are also feeling the strain. “Delayed payments for domestically produced gas have forced these companies to seek greater autonomy in their operations. Recently, the government permitted E&P firms to sell a portion of their new gas directly to private entities, bypassing the state-owned distribution channels.” “The cumulative effect of these issues is a complex web of challenges facing the energy sector.

With reduced domestic gas production and escalating circular debt, the reliance on imported LNG becomes increasingly burdensome,” he said. Hussain asserted that without immediate strategic interventions and infrastructure development, the country’s energy crisis will deepen, affecting not only industrial growth but also the daily lives of citizens. “The urgency for a cohesive energy strategy has never been more critical as the country grapples with financial and operational vulnerabilities in an ever-changing global energy landscape.”

Credit: INP-WealthPk