The landscape of Pakistan’s energy sector has faced a significant hurdle as government officials confirmed during a public hearing on Tuesday that liquefied natural gas supplies are currently under force majeure. This legal declaration indicates that providers are unable to fulfill their contractual delivery obligations due to extraordinary circumstances beyond their control. Consequently, these critical fuel stocks are unavailable for power generation, creating a complex challenge for the national grid which relies on LNG-based plants for a combined generation capacity exceeding 4,500 megawatts.
Rehan Akhtar, the Chief Executive Officer of the Central Power Purchasing Agency, detailed the situation during a testimony before the National Electric Power Regulatory Authority. He explained that while the natural gas supply chain is severely strained, the country’s coal-based power generation remains stable. Since the majority of coal imports originate from South Africa and Indonesia, these routes remain unaffected by the escalating tensions and logistical disruptions currently plaguing the Middle East. This stability in coal imports provides a vital cushion as the state navigates the broader energy crunch.
The primary driver behind this supply crisis is the nearly month-long conflict involving regional powers which has spilled over into the Gulf. This geopolitical instability has particularly impacted the Strait of Hormuz, a narrow but vital maritime corridor that previously handled 20 percent of global LNG and a quarter of seaborne oil. The situation reached a critical point when Qatar, a major energy exporter, halted operations at its LNG facilities in early March and declared force majeure shortly thereafter. This move effectively removed a source that accounts for a fifth of the world’s LNG supply from the global market.
To manage the resulting shortage, the Power Planning and Monitoring Company is preparing to introduce a new pricing package aimed at shifting consumer behavior. Naveed Qaiser, the Chief Financial Officer of the PPMC, informed the hearing that the government plans to encourage higher electricity utilization during daytime hours. By leveraging cheaper electricity available when solar power generation is at its peak, the state hopes to reduce the pressure on expensive or unavailable thermal fuels. Officials assured the public that the government is monitoring the situation daily to prevent massive price shocks, stating that fuel cost adjustments are being managed to stay within reasonable bounds.
Despite the disruption in the gas sector, there is some positive news regarding the circular debt and industrial stability. The hearing was informed that the circular debt stood at 1.7 trillion rupees in January, a notable reduction of 780 billion rupees compared to the previous year. Additionally, industrial representatives have urged the government to establish a fixed, long-term tariff regime to ensure international competitiveness. Current data shows that the government has successfully absorbed various cost pressures, providing significant cumulative relief to consumers over the first eight months of the fiscal year and witnessing a 25 percent growth in industrial electricity consumption due to previous incentive packages.
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