News
Friday, July 29, 2011
KESC outstanding dues touch Rs 30bn markSSGC curtails gas supply to KESC
By Masroor Afzal Pasha
KARACHI: Sui Southern Gas Company (SSGC) has reduced its gas supply to the Karachi Electric Supply Company (KESC) by 60 mmcfd to 120 mmcfd as the power utility’s due gas bill touched Rs 30 billion mark.
SSGC Deputy Managing Director Zohair Siddiqui informed this in an emergency briefing held here at the company’s head office on Thursday.
He said the gas utility was compelled to take this step because its total outstanding with KESC had surged above Rs 30 billion and it is hard to run the affairs under such financial burden with the power utility.
While last month, he said, KESC paid only 50 percent of its current gas bill, this month (July) it has not made any further payments to the SSGC although the due date has already passed on July 20, he added.
KESC had not paid its full current bill till October 2010, but from November 2010 to May 2011 it paid its due bill regularly and now the company since June this year did not receive any amount from the KESC. As a result of this sordid state of affairs, SSGC is facing a severe financial crunch since its management is unable to pay the salaries to its employees and settle its obligations with exploration and production (E&P) companies.
“The SSGC categorically dispels the impression created in the media that it has totally cut-off its gas supplies to the KESC, he said, adding it has only curtailed its natural gas supply by 60 mmcfd due to KESC’s incapacity to settle the outstanding dues with the gas utility.
This worsening receivables position has threatened SSGC’s survival unless the KESC starts paying up its dues on a regular and consistent basis. SSGC is committed to ensure that Karachiites to receive uninterrupted power supply yet KESC’s inability to settle its dues with SSGC has forced it to curtail the gas supply.
It my be mentioned here that in October last year, the SSGC had served a final notice to the KESC for paying current (monthly) gas bill regularly or face disconnection. The KESC after receiving final notice started paying current bill on regularly basis but the outstanding amount looms at Rs24bn that now reached to Rs30bn, while an amount of Rs6bn under the head of late payments surcharges the amount SSGC borrow from banks to pay to E&P companies and other expenditures.
Meanwhile, the KESC claimed that the power utility has raised warning bells on the sudden and unilateral decision taken by the SSGC on Thursday morning. The unannounced reduction in the gas supply started-off by the dropping of gas pressure at the power plants due to valve pinching by the SSGC was the beginning of the fiasco.
Due to this action the gas turbines at the power plants started tripping, leading not only to the damage of the equipment but also reduction of the power generation capability. It came to light that SSGC had made an irresponsible and unilateral step in reducing KESC’s gas supply from the already low level of 180 mmcfd to an abysmal 120 mmcfd. The power utility had many a times reiterated the fact that to cater to the city’s growing power demand of 2500 MW daily, the minimum required gas supply is 276 mmcfd.
This unexplained and strange move by the SSGC has been made using payment dues as an excuse, which is in fact far from the truth. In the past 12 months, July 2010 to June 2011 KESC has made gas purchases from SSGC amounting to Rs25.6 billion, of which an amount of Rs 21.4 billion has already be paid and accounted for. The government institutions themselves owe KESC over Rs 22 billion of which about Rs 14.5 billion are payable by KWSB alone and the remainder is payable by CDGK, police, Rangers and other provincial entities.
KESC has multiple times urged the Ministry of Finance to pay this outstanding amount owed by the provincial authorities of Rs 22 billion, directly to the SSGC and PSO to offset the amount claimed by these fuel suppliers, but till date there has been no developments.
KESC handout maintained, “The irony of the whole episode is that KWSB has been earmarked as a ‘strategic customer’, despite being a defaulter to the tune of Rs 14.3 billion. In the past 12 months KWSB’s power bills have amounted to Rs 4.3 billion of which only a dismal figure of Rs 250 million has been paid till date.
Courtesy www.dailytimes.com.pk