Pakistan floods endanger power plants, aggravate energy crisis

Severe floods in Pakistan, triggered by record monsoons and a glacial melt in the mountainous north, have endangered grid stations and exacerbated power shortages at a time when the country is already grappling with an acute energy crisis and limited LNG supplies.

The country's Sindh province -- among the hardest hit by floods -- has the Dadu station that supplies power to about six provincial districts.

After frantic efforts, the grid station at Dadu has now been "saved," a district official Syed Murtaza Ali Shah told S&P Global Commodity Insights Sept. 13, adding that it is now "out of danger" as water levels have started receding.

Some areas are still threatened by the devastating floods.

Khairpur, a district located between middle and northern Sindh, has been inundated and the grid station there has been affected too, forcing people to migrate to other localities, Shah said.

"We have urged the government and other electricity supply companies to start restoration and repair work there," Shah said.

A few of the gas pipelines, especially in Balochistan, were swept away due to immense water flows, said an official with Sui Southern Gas, the company managing gas pipelines in the province.

Repair works on two main gas pipelines have been completed recently after initial delays due to the floods, he said.

There was a complete blackout in provincial capital Quetta during the past few days, as well as in other adjoining cities including Kalat, Khudzar and Pishin, according to an official with the Balochistan government.

While supply from Pakistan's National Grid has been restored partially, consumers continue to face 10-11 hours of blackouts, he said. The situation is graver in other cities, where outages last 14-16 hours while repair works at the UCH power plant are still underway, he added.

The UCH Power Station is a 932 MW gas-fired project in Balochistan.

Meeting power, energy needs

The South Asian country booked a record federal budget deficit of nearly Pakistan rupees 5.5 trillion ($23.5 billion) in fiscal year 2021-22 ended June 30, with soaring import bills, a depreciating currency and the recent weather-related vagaries forcing it to resort to austerity measures.

"We believe that government will keep doing rationing in electricity so that costly power to be avoided in the system," said Farhan Mahmood, head of research at Karachi-based broker Sherman Securities.

Pakistan's energy import costs have skyrocketed due to high global commodities prices. In the fiscal year ended June 30, the country's LNG import bill surged 91% year on year to $4.989 billion, data from the Pakistan Bureau of Statistics showed.

Pakistan wants to secure additional LNG supplies, but high natural gas prices remain a key hurdle, an industry expert said.

Asian spot LNG prices have mostly stayed elevated, with the Platts JKM approaching all-time highs again in August. The daily physical assessment reached $71.01/MMBtu Aug. 25, the highest since March 7 when the benchmark hit a record $84.76/MMBtu.

The Platts JKM for October was assessed at $36.966/MMBtu Sept. 13, S&P Global Commodity Insights data showed.

Given current tough market conditions, Pakistan has been unsuccessful in buying spot LNG cargoes, with the country recently failing to receive any bids from suppliers for a tender seeking 10 spot LNG cargoes for delivery July-September, S&P Global reported in July.

Pakistan LNG has a buy-tender currently seeking 72 LNG cargoes over a period of six years, for one cargo delivery a month, starting January 2023. The closing date of the tender was originally Sept. 14 but has been postponed to Oct. 3.

"In late June, Pakistan's government said it would shift away from some LNG to alternative fuels, and we believe this will continue going forward," said Andre Lambine, senior analyst at S&P Global.

Platts Analytics forecast in a June report top-line power generation of 20.4 aGW for the third quarter, reflecting only a 200 aMW increase on the year.

LNG-fired power generation is expected to be 3.8 aGW, posting a decline of 1.5 aGW on the year. This is equivalent to a decline of 7 million cu m/d of gas demand or slightly more than two LNG cargoes a month, assuming 45% power plant fuel efficiency, it said, noting that total power generation from oil products is likely to be 1.6 aGW, a decline of 400 aMW on the year.