New Delhi, August 18: Pakistan’s massive $5 billion investment in infrastructure to import LNG from Qatar on the basis of a long-term contract has turned out to be huge liability for the country as there is now a mismatch between demand and supply due to the high cost of the natural gas, according to a report in the country’s largest English daily, The News International.

Pakistan embarked on a large-scale LNG-based energy initiative beginning in 2014, under which construction of four major RLNG plants, port facilities and a pipeline network for supplying gas to consumers was carried out. A decade down the line, this has proved to be a massive fiasco. India Exposes Pakistan’s ‘Gross Hypocrisy’ at UNSC Over Terror and Child Rights Abuses.

The report in Pakistan’s prominent newspaper highlights that “there is a disconnect between the Power Division and the Petroleum Division. Rather than delivering energy security, this ambitious initiative has resulted in a costly mismatch between supply and demand and is now a multi-billion-dollar drag on Pakistan’s economy.”

The report points out that the government overcommitted to ‘take-or-pay’ contracts without securing demand guarantees and failed to anticipate global LNG price volatility and underestimated the risks of market exposure. India Slams Pakistan Over Continuous ‘Reckless, War-Mongering and Hateful’ Comments, Warns ‘Any Misadventure Will Have Painful Consequences’.

According to it, to supply fuel for the LNG power plants, Pakistan signed two long-term LNG contracts with Qatar, both backed by sovereign 'Take-or-Pay' guarantees. The first agreement, signed in 2016, secured 3.75 million tonnes per annum (mtpa) for 15 years at 13.37 per cent of Brent, with an estimated cost between $16 billion and $25 billion. The second deal, signed in 2021, added 3 mtpa for 10 years at 10.2 per cent of Brent, costing an additional $10 to $15 billion. Together, these contracts represent a financial commitment of approximately $26 billion to $40 billion.

In an ambitious bid to address chronic power shortages, Pakistan embarked on a large-scale LNG-based energy initiative beginning in 2014. This multi-billion-dollar effort included the planning and construction of four major RLNG power plants – Haveli Bahadur Shah, Balloki, Bhikki and Nandipur – as well as the launch of the country’s first LNG import terminal.

Based on industry benchmarks for combined-cycle gas turbine (CCGT) plants and partial privatisation data, the total cost of the four LNG power plants is estimated to be between $3.5 billion and $5.5 billion. A reasonable midpoint estimate would be approximately $4.5 billion, according to the report.

In 2014, Engro Elengy Terminal – Pakistan’s first LNG terminal – was launched. Industry estimates place the cost of the jetty and short pipeline between $50 million and $100 million. Including the FSRU and associated infrastructure, the total cost is likely in the range of $150 million to $250 million.

The Pakistan GasPort Consortium (PGPC) Terminal – Pakistan’s second LNG terminal – has a designed capacity of 600 mmcfd. The project represents an investment of approximately $500 million, covering the cost of the jetty, marine works, a Floating Storage and Regasification Unit (FSRU), and pipeline infrastructure connecting the terminal to the national gas grid.

In addition to the terminals, a billion-dollar pipeline infrastructure was developed to transport RLNG from Port Qasim in Karachi to four RLNG power plants in Punjab. This system began with a 24 km pipeline from the Engro terminal and a 14 km pipeline from the GasPort terminal. Both were integrated into a significantly upgraded SNGPL network, which stretches roughly 1,100 km to Punjab. The total cost of this transmission network is estimated between $800 million and $1 billion, the report explains.

(The above story first appeared on LatestLY on Aug 18, 2025 10:08 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).