Pakistan resorts to Afghan coal as energy crisis worsens

Pakistan's prime minister's office announced on June 27 it had approved the import of coal from Afghanistan, as the country suffers from rolling blackouts due to energy shortages.

Pakistan's electricity consumption has soared in recent months due to a summer heat wave, meanwhile its hydroelectric power dams have been performing poorly and it has struggled to obtain LNG cargoes because of the market's tightness, and the international price of coal has also soared. The country's power demand is currently exceeding supply by 7 GW, implying a 25% shortfall. 

In a message on social media, the prime minister's office said that by tapping Afghanistan for coal for its Sahiwal and Hub power plants, it expects to reduce its import bill by over $2.2bn annually. Afghanistan fell under the control of the Taliban last year following the withdrawal of US forces, and has since been largely shunned by the international community.

State-owned Pakistan LNG on June 26 cancelled a tender for LNG supplies next month after receiving only a single, high-priced bid from Qatar Energy Trading. This is the third time this month that Pakistan has unsuccessfully invited bids for LNG cargoes.

Pakistan bought nearly half of its LNG on the spot market last year, making it very vulnerable to international prices and supply constraints. The situation on the global LNG market has prompted Pakistan to expand power generation using dirtier coal and fuel oil. The government has also taken steps to curb energy use, including by cutting working hours for public servants and ordering shopping malls and factories to shut early in some cities including Karachi.