The IMF’s Role in Collapsing Pakistan’s LNG Market & Export Viability

FROM REFORMS TO RUINS: THE IMF’S ROLE IN COLLAPSING PAKISTAN’S LNG MARKET AND EXPORT VIABILITY

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June 4, 2025

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Writer: MR. ASIM RIAZ AN ESTABLISHED ENERGY EXPERT, M.PHIL. STRATEGIC STUDIES NDU,MASTERS IN ENERGY MANAGEMENT CIIT, B.SC. (MECHANICAL) UET, BS. MATH-PHYSICS PU.

Pakistan’s commodity markets are subject to arbitrary administrative control, where prices and allocations are dictated by the whims of Deputy Commissioners, Commissioners, and Federal Secretaries—rather than by supply-demand fundamentals.

This distortion of free market principles undermines economic efficiency, erodes investor confidence, and encourages rent-seeking over productive enterprise. By sidelining transparent market mechanisms in favor of bureaucratic discretion, the state perpetuates misallocation of resources, suppresses innovation, and stalls sustainable growth across key sectors. The IMF, rather than correcting this dysfunction, has amplified it.

Through the Captive Gas Levy Act, it has imposed a forced transition from efficient, decentralized LNG-based captive generation to the centralized grid—even as coal-fired CPEC plants remain under-dispatched. This distortion not only worsens energy inefficiency and environmental degradation but also undermines Pakistan’s industrial capacity to meet international climate compliance standards such as the EU’s Carbon Border Adjustment Mechanism (CBAM), jeopardizing export viability. The fallout is visible in the gas market: demand destruction of approximately 3 MTPA or 400 MMCFD of RLNG from the industrial captive sector has triggered a full-blown supply crisis.

SNGPL alone is now saddled with a surplus of 450 MMCFD—translating into 54 out of 120 contracted cargoes effectively stranded (Slide attached along with petition Summary). With take-or-pay LNG contracts in place and no viable off-takers, the financial viability of the gas chain is in jeopardy.

This is not reform—it is distortion institutionalized through administrative fiat and external pressure.