Pakistan to Redirect Imported LNG to Domestic Sector Amid Reduced Power Consumption
In a strategic shift, Pakistan has decided to redirect its supply of imported liquefied natural gas (LNG) to domestic consumers due to a reduction in electricity demand. The Ministry of Petroleum revealed that redirecting the LNG for domestic use will require an investment of Rs163 billion.
According to ministry documents, imported LNG has been causing increased pressure on the country’s pipeline infrastructure. Previously, the power sector utilized 600 million cubic feet per day (MMcfd) of LNG. However, with the recent shutdown of captive power plants, approximately 150 MMcfd of LNG has been freed up, creating a surplus. While this shift is expected to benefit the domestic sector, the gas sector is still generating revenue from captive power operations, reportedly amounting to Rs400 billion.
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The government has also outlined a plan to address Pakistan’s circular debt by restructuring gas tariffs. A significant part of this strategy involves removing the price disparity between locally produced gas and imported LNG. Currently, local gas is priced at Rs1,550 per MMcfd, while imported LNG stands at Rs3,500 per MMcfd. By equalizing these tariffs, the government anticipates an additional Rs200 billion in revenue.
To further support revenue generation, tariffs for fertilizer companies will also see an increase, aligning with broader fiscal goals. The newly adjusted gas tariffs are scheduled to take effect in February 2025, marking a key step in the government’s ongoing efforts to balance energy sector debts and improve financial stability.
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