After two LNG suppliers defaulted on their agreements and refused to supply LNG cargoes, Pakistan had to urgently secure more cargoes from some place if it wanted to avoid severe gas shortages. Just a few days after the default, Pakistan floated a tender to secure cargoes, which indicated the urgency of the matter. It is thus not a surprise that the replacement cargoes that Pakistan has secured have been ticketed at the highest-ever price of $30.6 per Million British Thermal Units (mmbtu) from Qatar Petroleum.

This is of course a heavy onus on our import bill and on the deficit. It will also be seen how the government will manage this without further inflation of prices. The government has been on the receiving end of criticism for inflation—yet it must not evade difficult decisions that would be better for the long-term for political popularity. It must be remembered that a large part of this gas crisis is due to a global rise in prices—the international market has never seen such an unexpected hike in prices.

However, it is also time for the government to adjust to the changing realities and be prudent. The defaults were disastrous but were a consequence of the unprecedented market rise and poor agreements. This winter will be difficult but the government now must turn to long-term solutions to this gas crisis. Knowing how volatile the market is, the government must adjust its policies accordingly. We did not utilise LNG when the prices were low in the market in 2020. Nor have we been able to foster a competitive environment so we can escape such exploitative agreements that we have had to sign now in the wake of the crisis. Perhaps it is time to look into more drastic measures to deal with this crisis, like ending the monopoly enjoyed by state-owned gas utility companies.