SSGC cuts off gas supply to PSM

Company says action taken after due process

ISLAMABAD:

The Sui Southern Gas Company (SSGC) has disconnected the gas supply to the Pakistan Steel Mills (PSM) after several notices went unheeded.

A statement issued by the SSGC read that the PSM started partially defaulting to the gas company in making payments of monthly bills from November 2008.

Later, it completely stopped making any payments after March 2015. Subsequently, the SSGC served various termination notices to the PSM in July and August 2015 because of the latter continuously defaulting on its payments.

In addition, because of the continuous default, the SSGC gradually reduced its gas supplies to PSM from 21 MMCFD in FY 2014-15 to two MMCFD in FY 2015-16.

The gas company, however, waived the disconnection notices several times in order to keep the coke oven batteries of the PSM intact and also to help in achieving the resumption of the steel mill’s operations in any future revival plans.

Since then, the SSGC has been continuously supplying gas to the PSM at a quantum of two MMCFD with an average billing value of Rs100 million per month. However, the payments by the PSM remained erratic.

On consistent follow-up by the SSGC, the PSM started making monthly payments to the company from February 2020 in the wake of the release of funds to the steel mill by the federal government in the form of budgetary allocations. The government was trying to prevent the PSM from defaulting on its gas bills.

However, the funds were being released after a lapse of a considerable time, causing the SSGC to bear a financial burden because of the significant delays in payments. The federal government, including the Privatisation Commission, industries and production ministry and energy (Petroleum Division) ministry had been working on the revival plans for the PSM various times.

Through a written communication from the steel mill, the gas utility was informed about a recent Economic Coordination Committee (ECC) of the cabinet meeting, wherein it was decided “that no further payment against the consumption of gas supply to the PSM will be made beyond June 30, 2024 so that no further liability of federal government against the SSGC could accrue”.

Keeping this in view, the SSGC sought clarification from the PSM and served a disconnection notice. However, the PSM did not respond to the SSGC’s notice. Consequently, the SSGC after the expiry of the deadline disconnected gas supply to the PSM while keeping in loop all relevant ministries of the federal government.