Pakistan relies on Qatar for LNG amid dwindling foreign reserves

Islamabad: Finance Minister Miftah Ismail said on Saturday that Pakistan would seek a deferred payment plan for liquefied natural gas (LNG) purchased under long-term deals with Qatar as the national economy continues to falter remain in the doldrums awaiting IMF funds amid falling currencies. reservations.

“We talked about a deferred payment plan…or at least I asked for that…and [Pakistan’s] The Minister of Petroleum is leading the negotiations and will lead the talks,” Dawn reported, quoting Ismail.
Pakistan is awaiting IMF funds as the country faces declining foreign exchange reserves that are only enough for less than 45 days of imports, and a huge current account deficit.

Additionally, there is a huge current account deficit with energy purchases dominating the record import bill, Dawn added, citing reports.

Miftah on Friday unveiled the 2022-23 budget aimed at fiscal consolidation as Pakistan tries to convince the International Monetary Fund (IMF) to revive much-needed financial support. But the lender has expressed concerns over the numbers, including its current account deficit.

Oil Minister Musadik Malik, who was in Doha this week for talks with Qatari Minister of State for Energy Affairs and Managing Director of Qatar Energy, Saad al-Kaabi, confirmed the talks, but said the government was exploring various “innovative” large-scale pricing and sourcing strategies. based talks.

“A deferred payment would obviously be hugely beneficial to Pakistan in terms of cash flow, but that’s not the only discussion we have,” Malik said in an audio message, calling the talks “preliminary,” however, the government of Qatar did not immediately respond to the request.

Pakistan already has two long-term supply agreements with Qatar – the first signed in 2016 for five shipments per month, and the second in 2021, under which Pakistan currently receives three monthly shipments, but the country is currently under the massive grip of widespread blackouts. as chilled fuel supply remains unreliable and expensive due to its increased reliance on LNG for power generation.

Ismail said the government was also talking to Qatar about a new five- or 10-year LNG supply deal for three monthly cargoes, as well as an additional cargo under an existing deal.

The rapid depletion of foreign exchange reserves was the result of inflation from Pakistan’s twin deficits and a lack of foreign exchange inflows.

Inflation in Pakistan crossed the double-digit mark in July, the highest increase in almost six years.

In April, imports increased by 72%, leaving no room for the government to improve its external balances while the central bank’s foreign exchange reserves reached $10.3 billion, the lowest since June 2020.