Govt to Spend Rs. 163 Billion on Adding Surplus LNG Stock to National Gas Pipeline

The federal government has decided to spend Rs. 163 billion to redirect imported liquefied natural gas (LNG) from the power sector to domestic consumers in response to a reduction in electricity demand, Petroleum Division sources told ProPakistani. Sources said the government believes that this will help balance seasonal demand. However, it would cost a significant portion of public money of approximately Rs. 163 billion to supply LNG to residential consumers. Sources said this move will ease pipeline pressure caused by the daily addition of imported gas. Previously, the power sector used up to 600 million cubic feet (MMCF) of LNG usage. However, the recent shutdown of captive power plants has created a surplus of about 150 MMCF of LNG. Sources said captive power generated an estimated Rs. 400 billion in revenue for the gas sector, which could be impacted by this shift to surplus LNG. Besides LNG, the government plans to increase gas tariffs from February 2025. This adjustment will address the tariff disparity between imported LNG which costs Rs. 3,500 per million cubic feet per day (MMCFD), and domestic gas at Rs. 1,550 per MMcfd. Eliminating this tariff differential could boost government revenue by up to Rs. 200 billion, sources added. Tariff hikes are also expected for fertilizer companies, as the government is trying to ensure fiscal sustainability across sectors affected by the aforementioned adjustments.