Prime Minister Shehbaz Sharif on Friday jacked up prices of both high-speed diesel (HSD) and petrol by Rs26.77 per litre despite no increase being required in the rates of petrol.
The premier imposed a nearly Rs27 per litre additional tax on the fuel to push its price higher.
Accordingly, the HSD price has been fixed at Rs380.19 per litre, up from Rs353.42 per litre. This marks a 7.5% increase. Diesel prices are still significantly lower than their peak of Rs520.4 on April 10. Diesel is considered the most inflationary fuel due to its widespread use in freight transportation and the agriculture sector.
The prime minister approved an increase in petrol prices to Rs393.35 per litre, up from Rs366.6. This shows an increase of 7.3% over the existing prices. Petroleum Division officials said that there was no change in the petrol prices in the international market and the rates had to be jacked up due to an increase in the tax.
The new levy rate on petrol has been fixed at Rs107.4 per litre.
Meanwhile, after a gap of 28 months, state-run Pakistan LNG Limited (PLL) on Friday secured three bids at $17.997 to $18.88 per million British thermal units (mmBtu) for delivery between April 27 and May 8.
A total of four bids were received and three were declared the lowest.
For the first delivery window of April 27-30, TotalEnergies submitted the lowest bid of $18.88 per mmBtu. Vitol Bahrain’s bid of $18.54 was declared the lowest for the May 1-7 window, while OQ Trading was declared the lowest bidder at $17.997 per mmBtu for delivery between May 8 and 14.
The tender came following Qatar’s reluctance to send LNG-loaded cargoes stranded in the Gulf due to the closure of the Strait of Hormuz. Qatar’s three LNG cargoes meant for Pakistan had earlier returned from the vital waterway due to security reasons.
All three cargoes will carry 140,000 cubic meters of LNG delivered ex-ship (DES). Each cargo to Pakistan of this size typically means around 100 million cubic feet per day (mmcfd).
PLL, one of the public sector entities responsible for LNG imports, did not import any cargo last month. In fact, it had imported one cargo a couple of months ago after a gap of almost a year at the rate of $7.65 per mmBtu through its old contract with a private entity.
The PLL, established almost a decade ago for LNG imports, had become redundant and a net burden on public money as it could not import energy over the past year despite its executives and board of directors enjoying hefty remunerations and associated perks and privileges. It had last floated an LNG tender in December 2023 for delivery in January 2024, but later cancelled the tender.
Facing criticism over loadshedding even before the summer months, the power division placed an order with the petroleum division to arrange around 400 mmcfd of LNG for power generation, amid hopes for the opening of international supply routes.
LNG imports had stopped early last month after the closure of the Strait of Hormuz following US-Israel attacks on Iran. Last month, Qatar declared force majeure on all its global LNG contracts, including those with Pakistan.
Sources said that in the middle of an electricity shortfall, the power division made an urgent call for support from all stakeholders for the purchase of LNG cargoes, after it learned of the possibility of Pakistani-flagged ships passing through the Middle Eastern chokepoint.
However, this did not materialise immediately.
Sources said the power shortfall would keep on increasing as temperatures rise in the coming days, and it would be nearly impossible to stabilise the national grid without major power plants, particularly the LNG-based plants in Punjab, which has a total generation capacity of around 6,000MW.
On top of that, the utilisation of high-speed diesel (HSD) and even furnace oil at current market prices could push fuel costs through the roof.
In that case, even one or two cargoes from the open spot market, the sources added, could be economically viable in the greater power mix when compared to diesel and furnace oil.
“With the onset of the summer season, electricity demand has started to rise significantly across the country. In this regard, the availability of RLNG remains critical for ensuring optimal power generation and maintaining system stability,” the Power Division wrote to the Petroleum Division.
It highlighted that any shortfall in RLNG supply would necessitate increased reliance on expensive alternative fuels such as HSD.
“This would not only result in a substantial increase in the overall cost of generation but would also lead to prolonged hours of load management, thereby increasing the fuel cost adjustment (FCA) burden on end consumers,” the Power Divison explained.
All four mega LNG plants of the federal and Punjab governments, along with the medium-sized Nandipur plant, can use HSD as an alternative fuel; the generation price difference is normally more than Rs25 per unit, which is estimated to be higher at present, given volatile oil prices changing weekly.
These plants are also required for system stability for the evacuation of surplus power from the southern part of the country.
To ensure smooth system operations and avoid the aforementioned impacts, the power division has also provided a detailed weekly forecast of RLNG requirements – segregated for solar and non-solar hours, along with average demand – prepared for the National Grid Company (NGC) system.
“Furthermore, K-Electric (KE) has also conveyed its RLNG requirement for the KE system,” the Power Division said, formally requesting the Petroleum Division to manage and allocate the Qatar-contracted cargoes in a manner that ensures the availability of RLNG in line with the demand plan for both the NGC and KE systems, thereby supporting uninterrupted and cost-effective power generation.
Officials said the cost of HSD-based generation, which previously exceeded Rs45 per unit before the US-Israel strikes on Iran, might now have risen beyond Rs80 per unit.