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High Energy Prices Lead To Power Cuts In Pakistan 

Soaring prices of liquefied natural gas (LNG) and coal on the international markets have left Pakistan, the world’s fifth-most populous nation, with having to cut electricity supply to households and industry as the country in a deep political and economic crisis cannot afford to buy more of the expensive fossil fuels.

Pakistan—whose population is the fifth largest in the world after China, India, the United States, and Indonesia—started to feel the pinch of high energy prices as early as last autumn, when it was struggling to procure imported LNG for its power plants. Pakistan’s predicament came amid a global natural gas crunch and surging prices for the fuel in Europe and Asia, months before prices shot up again as a consequence of the Russian invasion of Ukraine.

As global energy prices remain elevated and highly volatile with the Russian war in Ukraine, Pakistan—dependent on imports with relatively poor state finances—is especially hard hit.

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The energy crisis, and the political crisis with last week’s ousting of Imran Khan as prime minister of the country, which has nuclear weapons, have combined to throw the Pakistani state budget and finances into disarray.

Now Pakistan cannot afford to buy more LNG and coal, on which its power plants rely to generate electricity, Bloomberg reported on Monday.

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In the middle of last week, on April 13, a total of 7,140 megawatts (MW) capacity plants were shut either due to fuel shortage or technical faults, Miftah Ismail tweeted. Ismail has been picked to serve as a finance minister by new Prime Minister-designate Shehbaz Sharif.

According to Bilal Kayani, Assistant Secretary General at the Pakistani party PMLN, foreign exchange reserves at the State Bank of Pakistan (SBP) amounted to just $10.8 billion on 8 April, a day before Imran Khan was ousted through the vote of no confidence. That’s less than 2 months of import cover. Reserves declined rapidly by $5.4 billion in just 5 weeks, Kayani said.  

By Tsvetana Paraskova for Oilprice.com

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