Pakistan to seek deferred payments for Qatari LNG: Miftah Ismail

Published June 11, 2022
Federal Minister for Finance and Revenue Miftah Ismail speaks during an interview with Reuters at his office, in Islamabad, June 11. — Reuters
Federal Minister for Finance and Revenue Miftah Ismail speaks during an interview with Reuters at his office, in Islamabad, June 11. — Reuters

Finance Minister Miftah Ismail said on Saturday that Pakistan will seek a deferred payment plan for liquefied natural gas (LNG) bought under long-term deals with Qatar as the country faces a balance of payments crisis and falling foreign exchange reserves.

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

"We've talked about a deferred payment plan ... or at least I've requested this ... and [Pakistan's] petroleum minister is doing negotiations and is going to do the talks," Ismail told Reuters in an interview.

As it awaits IMF funds, the country is faced with falling foreign exchange reserves, enough for less than 45 days of imports, and a huge current account deficit — with energy purchases dominating the record import bill.

Global energy prices have risen to record levels in recent months amid reduced Russian supply and resurgent demand in Asia.

Petroleum Minister Musadik Malik, who was in Doha this week for talks with Qatari Minister of State for Energy Affairs and Qatar Energy chief executive Saad al-Kaabi, confirmed talks but said the government was exploring different "innovative" pricing and supply strategies in broad-based talks.

"Deferred payment obviously would be enormously beneficial for Pakistan in the way of cash flows, but that is not the only discussion that we are having," Malik said in an audio message, describing the discussions as "preliminary".

Qatar's government did not immediately respond to a request for comment.

Term contracts

In recent years Pakistan has increased reliance on LNG for electricity generation, but is facing widespread power outrages as procurement of the chilled fuel remains unreliable and expensive.

Ismail said the government was also speaking 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.

Pakistan already has two long-term supply deals with Qatar — the first signed in 2016 for five cargoes a month, and the second in 2021, under which Pakistan currently gets three monthly shipments.

Malik said Qatar was among multiple suppliers Pakistan was talking to for term contracts as it tries to navigate a "hot" and "pricey" market.

Pakistan has unsuccessfully tapped the spot market for an extra July cargo, with two tenders over the last week not returning valid bids.

Ismail said two other long-term suppliers had been unable to fulfil contractual supply obligations to Pakistan.

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