PSM seeks BOI’s help for restoration of gas pressure

ISLAMABAD: The chief executive officer of Pakistan Steel has urged the chairman Board of Investment that the gas pressure to PSM be restored immediately “as any further K-electric tripping will damage the plant beyond redemption and that the management and workers of PSM have spent a night of terror on 7/8 July 2015 and with great difficulty saved the plant but this can’t be said about the future.”
In a letter to chairman BOI Miftah Ismail, PSM CEO Gen (retd) Zaheer Ahmad Khan has mentioned that production at PSM is zero since June 10, 2015 when Sui Southern Gas Company lowered the gas pressure supplied to PSM which was not restored till July 6, 2015.
The letter states, “It is sadly apprised that our fear has been made a reality by SSGC not restoring gas pressure latest by 06 July 2015 as agreed at the highest level since K-electric went out completely at 9 pm 07th July 2015 for 12 hrs tripping our meagerly generating (3 to 15 MW) power plant due to inadequate gas supply and as a result stalling water supply to blast furnace and damaging its coolers”.
“The extent of the damage is being assessed while coke-oven battery was shifted to whatever meager gas supply was available after shutting-off power plant boilers since turbo-generator had tripped as mentioned above”, says the letter. “Had this not been done, coke-batteries which have to remain heated 24 hrs would have suffered collapse. The damage is currently being assessed. Absence of power led to suspension of pumping operations resulting in flooding of scale pit and other tunnels. The damage to structure is being assessed. Till now, short circuiting of cabling has not occurred but which still is a possibility and would be catastrophic”.
“Regarding the payments to SSGC since April 2013 the CEO has written that PSM’s bill for April 2013-March 2014 was Rs5 billion but only Rs0.8624 billion were paid while from April 2014 to March 2015, PSM’s gas bill was Rs5.5442 billion while Rs2.2 billion were paid by the current management”.
“In spite of working capital deficit due to four months delay, Rs20-30 crore were paid every month and Rs40 crore in March 2015 with promise to pay current bill from April 2015. However dumping reduced our sale drastically making it impossible to service our bills in April, May and June 2015 though we appreciate ECC for RD on 1st March 2015, 14th March 2015 and finally got approved 12.5% RD on Steel leaving our baron mixed alloy steel on 19th March 2015 which did not help a bit to increase sales. RD on baron alloy steel now has been enforced in recent budget”.
“The record is all clear to see; no stoppage of gas, and rightly so was done during previous year in spite of meager payment of Rs8.6 million while in spite of working capital delay 50% payment amounting to Rs2.6 billion were made since April 2014 and still our gas pressure was reduced first in January 2015 for 10 days and then in March 2015 when 50% and 65% capacity respectively were achieved and again since 10th June 2015 and to the extent that no production is possible.” “Pakistan Steel is not normal mill, it is an integrated plant whose 20 or so units are inter-related; it is also the biggest industrial complex of Pakistan and an essential foundation of its industrial growth; we all need to help it now that government has provided Rs18.5 billion to kick-start from zero production. It is earnestly requested not to damage a national asset now that it has been revived. As agreed, we will pay current bill, InshaAllah from next month so please restore gas pressure immediately as any more K-electric tripping will damage plant beyond redemption. We have spent a night of terror on 7/8 July 2015 and with great difficulty saved the plant and next time it may not be possible.”
It is worth mentioning here that the Sui Southern Gas Company (SSGC) through a press release has denied Pakistan Steel Mills’ (PSM) allegations and clarified that as on July 8, PSM has an outstanding balance of over Rs34 billion with SSGC, which is growing every month due to continuous default by the mill. PSM has defaulted on its payment commitments repeatedly and has not presented any palatable payment plan for the settlement of large overdue balances. The last partial payment received from PSM was in March 2015, SSGC said.
Despite the fact that PSM has been persistently defaulting on its payments, SSGC has been accommodating PSM and even today supplying it with 10mmcfd gas in order to keep its operations going. However, if PSM continues to default on its payments, its action will have a major impact on the financial health of SSGC, forcing the derailment of its capital expenditure projects, which are of national interest. SSGC is accountable to its board of directors and has the right to take remedial measures to protect the interest of the company, it said.