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Sunday, October 2, 2022

Telecom operators in Pakistan warn of shutting down mobile, internet services amid energy crisis

Telecom operators in Pakistan have issued warnings regarding the possibility of shutting down their mobile and internet services due to hours-long power outages. Currently, Pakistan is facing severe energy crisis and it is expected to increase in the future weeks and months. 

Because the government has mandated a 100% cash margin requirement on the import of telecom-related equipment, telecom providers hinted at stopping phone and internet services in a joint letter to the Pakistan Telecommunication Authority (PTA).

They assert that it is now problematic to supply towers and installations with backup energy on a constant basis. The problems of maintaining mobile towers with gasoline-powered backup systems were also cited by telecom operators. After the federal government increased gasoline prices to an all-time high of Rs 233.89 per litre, the event took place.

Investments in Pakistan’s telecom sector reached $6.1 billion during Imran Khan’s PTI govt

If the duty and taxes on Fiber Optical Cable and other telecom sector levies are not drastically decreased, connection load shedding would strike the nation in 2023.

Mobile phone services will be interrupted for hours because there will be no connectivity guaranteed without fiber optical cables, according to representatives of three major telecom operators, including Jazz, Telenor, and Ufone, who briefed the Senate Standing Committee on Finance on Friday afternoon.

The telecom authority already stated that unlike other utility firms, mobile operators cannot cease operations.

It argued that operators must adhere to the terms and conditions of their licenses in order to continue offering subscribers uninterrupted telecom services.

Pakistan Energy Crisis

Over the coming weeks, Pakistan’s energy situation is expected to get worse as the country attempts to find affordable liquefied natural gas (LNG) in a global market that has been severely impacted by the political fallout from the Russia-Ukraine war.

The price of LNG has soared to all-time highs as a result of the global shortages. The sole but most expensive offer that the state-owned LNG Ltd ever got in response to a tender for four LNG cargoes for delivery in July was rejected last week.

If Pakistan hadn’t rejected it, Qatar’s offer of an LNG cargo at just under $40/mmBtu would have been the most expensive. In November, Pakistan spent the most money ever on freight, paying $30.65/mmBtu.

This is Pakistan’s third failed attempt to purchase LNG cargoes for next month as it grapples with the possibility of a worsening of the country’s already widespread blackouts.

According to StatCounter only 6% of Pakistanis have an iPhone

Three offers were submitted for the first two tenders, which were released in May and June but were discarded since none of them met the technical requirements.

Although the government claims to be in talks with a number of gas suppliers, notably Russia, to alleviate local shortages, it has so far been unable to secure any new agreements to deal with energy crisis amid rising electricity prices.

The surge in energy prices, which was sparked by Covid-related supply interruptions and made worse by Russia’s war in Ukraine, has increased domestic power fuel costs by more than 100%.

In order to make up for some of the losses sustained as a result of costly fuel imports, the administration intends to increase power tariffs by 47% starting in the next month.

A study claims that despite the majority of cargoes coming from more affordable long-term contracts with Qatar due to pricey spot purchases by the current administration in April to meet the need for power, LNG prices in Pakistan have already increased by 40% in recent months. Therefore, it was wise to refuse the most expensive LNG shipment.

Over the coming months, it is likely that international gas supplies will remain constrained and their prices will remain high since Russia is unwilling to relent until it has achieved its strategic goals.

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