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Pakistan's $1-billion gas tender receives no takers amid energy crisis

It's the fourth time in roughly a month that Pakistan - which is already suffering frequent blackouts -- has failed to complete an LNG purchase tender

Pakistan flag
Inflation has topped 20 per cent, and the government is negotiating with the International Monetary Fund on a financial rescue package. Photo: ANI
Bloomberg
2 min read Last Updated : Jul 08 2022 | 2:08 AM IST
Pakistan’s energy crisis looks set to drag on for months after another failed attempt by the nation to import gas.

In an unusual development, state-owned Pakistan LNG didn’t receive a single offer in a $1 billion liquefied natural gas purchase tender, according to traders with knowledge of the matter. That illustrates both the extent of the global fuel shortage, and also the reluctance of suppliers to sell to a country in the depths of an economic crisis.

It’s the fourth time in roughly a month that Pakistan — which is already suffering frequent blackouts -- has failed to complete an LNG purchase tender. The relatively poor country is reliant on energy imports, meaning it’s been hit especially hard by soaring prices. Inflation has topped 20 per cent, and the government is negotiating with the International Monetary Fund on a financial rescue package.

Already elevated Asian gas prices started rising further over the last few weeks on increasing supply disruptions from Russia to the US. Global LNG flows are being redirected to energy-starved Europe, where utilities are willing to pay more than emerging markets. Thailand and India have also been curbing purchases due to the high prices, but they’re not in as perilous a situation as Pakistan.

The world’s fifth-most populous country was looking to buy 10 LNG cargoes from the spot market for delivery from July to September via the tender that closed on Thursday. Pakistan bought almost half of its LNG on the spot market last year, with the rest coming under long-term deals, according to data compiled by BloombergNEF.

Even if Pakistan’s tender had garnered offers from suppliers, the traders said it wasn’t clear that the government would have been able to make any purchases due to the soaring prices.

Rates hiked by 125 bps

Pakistan’s central bank rai­sed borrowing costs more than expected to quell Asia’s second-fastest inflation and meet conditions for a loan from the IMF.  State Bank of Pakistan lifted the target rate by 125 basis points to 15 per cent on Thursday. The move was predicted by only three of 24 economists in a Bloomberg survey (Bloomberg).

Topics :Pakistan Economic Crisis

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