Pakistan's cost for RLNG-based power generation surged in July after the government turned to expensive spot-market cargoes [1].
This price hike threatens to increase the financial burden on electricity consumers and power generation companies during a period of high energy demand. The shift in procurement strategy follows a disruption in stable energy imports.
The increase in costs stems from the suspension of LNG supplies from Qatar, which was triggered by the U.S.-Iran war [2]. To maintain power generation, the government was forced to purchase liquefied natural gas from the volatile spot market [2].
Data on the magnitude of the increase varies by source. According to one report, RLNG-based power generation costs rose 242% to Rs47.4 per unit in July, compared to less than Rs14 per unit in April [1]. Other reports indicate that overall power generation costs jumped 38% in July [2], while RLNG prices specifically were raised by up to 34.6% for the month [3].
In response to these rising overheads, power companies have sought a fuel cost adjustment for September [1]. This request would result in an increase of Rs2.52 per unit for consumers [1].
The reliance on spot-market purchases represents a significant departure from long-term contract stability. The government has had to navigate these price fluctuations to prevent widespread power outages as the primary supply chain from Qatar remained halted [2].
“RLNG-based power generation costs rose 242% to Rs47.4 per unit in July”
The volatility of Pakistan's energy sector is now directly tied to geopolitical instability in the Middle East. By losing access to contracted Qatari LNG due to the U.S.-Iran conflict, Pakistan has lost its price hedge, leaving the national grid vulnerable to the price swings of the global spot market. This creates a cycle where geopolitical conflicts translate directly into higher monthly utility bills for the Pakistani public.
