SSGC was supplying over 200mmcfd to KESC for running power plants, but has decided to cut it to 120mmcfd due to delay in payments. PHOTO: FILE
ISLAMABAD:
In an attempt to intensify its recovery drive, the board of directors of Sui Southern Gas Company (SSGC) has decided to stop gas supply to Karachi Electric Supply Company (KESC) if the latter does not pay its current bills and the late payment surcharge.
“If KESC did not pay the current bill by the end of every month, SSGC will stop providing gas to the power company,” a source said quoting the SSGC board.
The board, in a meeting held recently, also agreed to curtail gas supply by almost half to 120 million cubic feet per day (mmcfd) because of KESC’s failure to clear its dues. In case KESC failed to pay current bills, then supply will be stopped completely, it said.
According to the source, KESC had to pay Rs46 billion to SSGC including late payment surcharge of Rs15 billion. “If KESC does not clear the surcharge, gas supply should be stopped,” he quoted the board as saying.
Though KESC itself recovered the late payment surcharge from power consumers, it was not willing to pay it to SSGC, the source added.
In November last year, SSGC had filed a case against KESC in the Sindh High Court for the latter’s failure to clear gas bills, which have piled up to Rs46 billion now.
“SSGC was supplying over 200 mmcfd to KESC for running power plants, but has decided to cut it to 120 mmcfd because of delay in payment of dues,” an SSGC board member told The Express Tribune.
Another SSGC official pointed out that the company out of the total recovery of bills was paying 90% to gas exploration companies and the remaining 10% was being spent on running the company’s operation. “Now, SSGC is on the verge of financial collapse following continuous delay in clearing unpaid bills by KESC,” he said.
SSGC is not the only company encountering problems. Other oil and gas firms are also in poor health as the Pakistan Peoples Party (PPP)-led government has left behind a financial crisis in the energy sector.
These companies have to receive bills of Rs524 billion from power firms and others, pushing many towards financial default and leaving for the caretaker government an apparently insurmountable task. Payables of these oil and gas firms stand at Rs159.64 billion.
Commenting on SSGC’s move, Deputy Director and Chief of Staff – CEO KESC Usama Qureshi claimed that the outstanding gas bill was Rs27 billion and the rest was interest at the rate of 15.5%.
“There is no agreement with SSGC to pay interest on the outstanding amount,” he stressed. “We have not defaulted on any payment for the last one and a half years.”
He asked SSGC to supply 276 mmcfd of gas, which is the requirement of KESC, and if they did, the power company would pay current bills as well as the dues. However, he said SSGC did not give its consent to the request.
“We are making regular payments to SSGC, most of the amount claimed by SSGC is late payment surcharge,” said another KESC official.
He emphasised that KESC was not collecting any surcharge from government departments on account of delay in clearing electricity bills, only the private consumers were asked to pay the surcharge. “The demand for late payment surcharge by SSGC is unjustified,” he said.
Referring to SSGC’s claim of Rs46 billion in unpaid bills, the official argued that the amount would not be more than Rs4 billion after the Ministry of Water and Power reconciled figures in terms of circular debt, which is plaguing the whole energy chain. “We will definitely pay this Rs4 billion,” he said.
Published in The Express Tribune, April 12th, 2013.
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