EDITORIAL: It’s too soon to tell whether reports about Russia offering coal instead of LNG (Liquefied Natural Gas) to Pakistan are true or not, but it’s already clear that we are in for a very difficult winter. Islamabad should, in fact, have realised that arranging LNG contracts is a long-term business, especially these days, and Moscow would not be able to commit on such short notice.
It was only in October that the power minister wrote to his Russian counterpart to explore the opportunity of importing LNG, after all, considering the shortfall for winter months. But the spot market is in a flux, mainly because of the changing security and political environment in Europe, and serious buyers would already have paid top dollar for winter contracts.
Besides, record shortfall in countries like Germany and France, because of the Ukraine war and sanctions on Russia, means that LNG hoarding season is also peaking with the winter cold. The Russians have reportedly said that they would “positively consider” Pakistan’s request, which seems about as far as this thing is going to go for now.
Perhaps matters could still have been escalated if the power minister had taken the trouble of going to Moscow for serious talks instead of sending a letter through the Pakistani ambassador there and reserving his own time for political talk shows on prime-time TV. Pakistan and Russia have been warming up very nicely since the then prime minister Imran Khan’s visit to Moscow some months ago, even though it also caused a considerable controversy. And this was the time to drive in the advantage, instead of taking such matters so lightly.
Now the minister will most likely be forced to take a break from confrontational politics and give more time to his ministry because there is going to be a scramble to meet domestic energy requirements. According to another verifiable report, the National Power Control Centre (NPCC) has determined the accumulated fuel requirement for three months – November 2022 to January 2023 – and warned of a generation shortfall in case of non- or under-supply of required fuels or other unforeseen events.
It has also said that apart from operational requirements of fuel-oil at various power plants, the fuel-oil stock that is consumed must also be replenished by consistent/cyclic stock buildup at all oil-based power plants. Otherwise, the fuel shortage would just trigger another power shortfall when demand peaks.
These are very serious matters and the power ministry’s paralysis is not just harming businesses and people, as usual, this time it is also going to hurt the ruling party.
The people are fed up with one needless economic crisis after another squeezing their life savings, and inflation rampaging when growth is dropping and unemployment is rising. They have already expressed their displeasure at various by-elections and local government polls. If they are put through yet another winter with power and gas shortage just because the power ministry was always behind on its homework, then they are sure to deliver a very severe verdict at the next general election.
Surely, the time to work out LNG imports for the Nov-Jan period was before October. Relying on imports without carrying out necessary discussions and drawing out contracts is simply unforgivable; especially when the economy is on life support, the country’s ratings are being dumped by leading agencies, and credit default swaps (CDSs) are flashing default level red flags all over again.
In sum, it’s not the Russians that have disappointed regarding the matter of importing LNG; it is the sitting government in Pakistan.
Copyright Business Recorder, 2022