Pakistan’s Gas Shortage

January 3, 2022

Natural gas shortage in Pakistan is impacting its most important export industry and is putting more stress on its economy, which is already struggling with weak currency and high inflation. Shortfall in supply is due to the inability of energy ministry to arrange supply.

Highlights

In December 2021, around $250 million of textiles exports were lost, when mills in Punjab were forced to shut for 15 days.
Factories in Punjab province are dependent on imports of liquefied natural gas, while its domestic supply is being diverted to other regions.

Why there is shortage of fuel in Pakistan?

Pakistan has emerged as a fast-growing import market for LNG, in the backdrop of subsidence of local supply and diminishing local gas sources over the last few years. The competition for the fuel has increased due to global shortages. This competition is sending princes to level which Pakistan cannot afford. In Pakistan, fuel is used as an electricity feedstock and for heating and cooking. Energy crisis is worsening due to increasing cost of LNG.

Textiles industry in Pakistan

Textile industry in Pakistan is one of its few economic bright spots. The industry supplies products ranging from denim jeans to hats to buyers in the U.S. and Europe.
Its production has increased almost 6 per cent in 9 months through March 2021. This sector accounted for 60 per cent of total exports.
Pakistan has exported $11.4 billion of textiles in the nine months through March 2021.

Shortage of gas in winter

Pakistan faces gas shortages every winter because its natural gas fields are witnessing a depletion of around 9 per cent each year while importing LNG is very expensive.

How this crisis can be solved?

Government in Pakistan will need to increase taxes. It has recently increased petrol price levies, on a pre-condition to resume its $6 billion bailout program with International Monetary Fund.

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