ISLAMABAD: Sept. 9, 2024: After Independent Power Producers’ (IPPs) nightmare, RLNG monster is here to threaten very survival of Pakistan. Costly RLNG is one of major reasons to make electricity even more costly for the consumers. IPPs and imported RLNG have made Pakistan’s economy bleeding for years. Today Pakistan’s economic growth is reeling between 2 % and 3 % mainly due to on-going power crisis.
Devastated by IPPs, beleaguered Pakistanis are made to face RLNG monster now. Its many times costly than other available sources of electricity which subsequently pushes Pakistan’s electricity rates beyond bearing capacity of the consumers and its first outcome is biting inflation, making every house hold worried about meeting necessities. According to the World Bank report Pakistan’s high electricity cost has pushed 40 % of its population below the poverty line in the last few years.
Pakistan had singed IPPs in bulk in 90s as commission was main factor to play in to brining in obsolete IPPs at one-sided terms and conditions singed in PPP government in 1994. Since then, Pakistan is paying heavy cost for these criminally crafted IPPs agreements and there seems no end to this devil. In 2015, Nawaz Sharif’s government brought in a plan to buy gas from Qatar to address the issue of gas crisis in the country. Nawaz Sharif, who is known for his relationship with Qatar, decided to signed long term agreement with Qatar in 2015 for importing RLNG. The agreement signed by Nawaz government with Qatar for import of RLNG was identical to IPPs. This agreement provides that Pakistan will take away five vessels carrying 500 mmcfd gas from Qatar Gas on monthly basis. This is one of the most expensive RLNG import agreement ever signed by Pakistan. The details of RLNG import deal available on Oil and Gas Regulatory Authority (OGRA) website suggest that RLNG imported from Qatar under 2015 agreement costs 13.3 % of Brent to Pakistan and the electricity produced from the imported RLNG costs Pakistan Rs 24 per unit. Pakistan’s cost of electricity from imported coal is around Rs 16 per unit. Pakistan is getting cheapest electricity from nuclear source. It costs only Rs 1 to the system. Next comes, hydro power source. It’s one unit costs only Rs 3 to the system. Furnace oil is even costing mush less than RLNG in electricity production. It costs only Rs 12 per unit of electricity to the system. These comparisons suggest that RLNG has made Pakistan’s entire power sector hostage.
Despite high cost of RLNG, its import from Qatar is top priority of PMLN government. In the given situation when Pakistan is facing potential threat of default on payments and its banning even crucial imports for the last more than two years, its spending $ 3.5 billion annually on unwanted imported RLNG. Since Nawaz Sharif’s agreement signed with Qatar is for 15 years period, it will cost Pakistan $ 35 billion if it goes on as it is for the remaining period. Pakistan does not need RLNG as its high cost is multiplying energy sector’s economic woes and most of its power plants have already shifted to coal, but vested interest is not letting the ruling elite take the matter to Qatar Sarkar for revoking or suspending for a few years of RLNG import agreement.
The agreements signed by Nawaz Sharif’s government in 2015 with Qatar has a provision of ‘TAKE OR PAY’. This provision of ‘TAKE OR PAY’ provides that Pakistan will pay 100 % cost of RLNG agreed in the deals even if it does not get a single mmcfd of gas from Qatar.
NEWSMAN has an official document which shows that in order to justify import of RLNG from Qatar, the government is discouraging local gas production. Sui Northern Gas Pipeline Company (SNGPL) is directing to gas field managements to slow down gas production from their field. Its giving a reason of choking of pipeline system for not permitting the oil fields to inject local gas into the system . This action is a national crime. The government is stopping local gas production which cost only $ 3 per mmcfd to the national kitty, but it’s not reviewing the policy of importing costly RLNG from Qatar. Imported RLNG is costing $ 12 per mmcfd to Pakistan.
Stopping of local gas production in love of imported RLNG has already damaged local production. Most of multinational oil and gas exploration companies have already packed their bags and left Pakistan. In the given situation local E&P companies have no business. The state owned E&P companies are already trapped in circular debt due to faulty government policy for petroleum sector and fighting for their survival. The government policy of restricting local production can be of extremely dangerous. It can result in choking of most of oil and gas field and it would cause irreparable loss to petroleum sector, besides putting Pakistan’s security at risk. Pakistan will not any alternate for fuel needs in the case of any misadventure from its enemy
Pakistan’s rulers are not even bothering to follow India’s strategy which stopped taking RLNG from Qatar despite having long term agreement with the same Qatar when its cost increased to other source of electricity production like enhancing local gas production , HSD , local coal and furnace oil. For information of Pakistan’s rulers who are preferring $ 13 mmcfd imported RLNG over locally produced gas of $ 3-4 mmcfd, India stopped RLNG import from Qatar during Covid-19 and its ‘TAKE OR PAY’ piled up to $ 1 billion penalty which later Qatar had written off.
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