A severe gas shortage is on the cards after Pakistan decided to hold off on buying expensive liquefied natural gas (LNG) cargoes until early next year, reported Bloomberg.
Singapore-based commodity trading company Trafigura Group responded to the country’s most recent request for LNG imports with two offers for January to February delivery at an approximately 30 percent premium to market prices. However, Pakistan LNG Limited decided on Monday not to buy the cargo, in part due to the heavy price tag.
This is the latest in a series of numerous failed attempts by Pakistan to obtain LNG since last year, forcing local authorities to inflate fuel rates at home. With this week’s decision to abandon any deals with the Singapore-based LNG supplier, the local industry may face a fuel crunch or planned power outages coming winter.
The development comes after Pakistan last month got a $3 billion bailout from the International Monetary Fund to help alleviate its chronic cash shortage and save its economy. Despite the lender’s approval, global LNG suppliers still have several reservations about the country’s credit risk, hence offering fuel shipments but at pricey rates to the cash-strapped South Asian economy.
Overall, the imminent shortage of gas supply to the export-oriented textile industry could create havoc and result in the closure of a number of industries, and a massive decline in the growth of large-scale manufacturing and textile exports during the winter season.