Pakistan opposition seeks probe into latest LNG purchase
Pakistan Muslim League-Nawaz (PML-N), Pakistan’s main opposition party, on July 31 demanded a probe into the recent purchase of LNG by the incumbent Pakistan Tehreek-e-Insaf (PTI) government.
“The recent RLNG purchase, which is most expensive to date, is a daylight robbery. The government failed to benefit from cheap RLNG rates during COVID-19 and is now making these costlier purchases. PTI’s incompetence and greed will cause our nation loss of billions of dollars,” PML-N president Shehbaz Sharif said on Twitter.
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According to local media reports, Pakistan has procured four LNG cargoes at the highest-ever rates at $15.19-$15.49/mm Btu for the month of September. The state-owned Pakistan LNG (PLL) first cancelled the tender of eight cargoes for September and October, arguing that the rates were higher at $13.78 per mmBtu, but now has procured four cargoes at the highest-ever rates, reported The News International.
“This procurement has cost the country $422.4mn extra. The PTI government repeatedly lied to the nation on the matter as it has bought LNG for $15/mm Btu which the PML-N bought for $8/mm Btu,” Sharif was quoted by the media as saying.
Sharif's comments came a day after the government clarified that roughly one-third of the country’s monthly LNG purchases are on a spot basis which is in line with the global average for the LNG importing countries.
“It is known that the spot LNG commodity price has spiked recently (to over $15/mn Btu) due to a variety of supply-related issues (curtailment from Exxon's facility in Papua New Guinea) and demand-related (higher in China and Japan due to warmer weather) factors,” the government said. “Therefore, PLL's board was forced to accept the four LNG spot tenders (at about $15/mn Btu) for September 2021.”
The government said that the replacement fuel, furnace oil, which is even more expensive, would have resulted in September power prices higher by at least 20%.
“Moreover, if, due to regasified LNG shortage, we are forced to burn diesel to fulfil summer power demand, the resultant incremental electricity generation cost in September would be almost 50% more expensive,” the government added. “So, it's the lesser of the two evils.”