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Thursday March 28, 2024

SSGC serves fresh supply disconnection warning to PSM

KARACHI: State-run utility Sui Southern Gas Company (SSGC) issued an overt warning that it could gradually cut gas supply to Pakistan Steel Mills (PSM) over unpaid bills of around Rs35 billion, advising the steel maker to shut down its plants to avoid any risk of damage. "PSM should gradually

By Salman Siddiqui
August 16, 2015
KARACHI: State-run utility Sui Southern Gas Company (SSGC) issued an overt warning that it could gradually cut gas supply to Pakistan Steel Mills (PSM) over unpaid bills of around Rs35 billion, advising the steel maker to shut down its plants to avoid any risk of damage.
"PSM should gradually shut down its blast furnaces, coke oven batteries and thermal power plant in order to avoid any risk of damage to these national assets,” read a SSGC notice signed by its Chief Operating Officer Shoaib Warsi.
“In the event of failure in making the requisite payment, SSGC will be compelled to not only discontinue deliveries of natural gas to the plant but also terminate the GSA (gas sales agreement) without any further notice at PSM sole risk as to consequences thereof,” said the notice served to PSM on August 12.
The notice said the gas utility had time and again deferred the disconnection, “in the larger national interest…(and on) the repeated request by the management of PSM.”
“Despite SSGC’s cooperation, it is regrettably noted that PSM failed to honour its contractual obligations.”
The gas utility asked PSM to immediately arrange outstanding dues “on or before 15 August 2015, which stands at Rs35.383 billion as of 11 August 2015.”
Earlier, the gas utility had also served PSM with a warning notice of gas supply disconnection by July 28 if the steel maker would fail to clear its dues.
A PSM official previously said the mills incurred a loss of around Rs1.5 billion due to very low gas supply by SSGC since June 10. “PSM has given zero production (in almost two months),” said the official.
The PSM official then said the lose-making steel maker could not clear dues until it resumes production.
The bills are nearly double the bailout package of Rs18.5 billion the government released during the last fiscal year of 2014/15.
The official said the gas bills had been accumulating since July 2008.
“SSGC’s action, ahead of PSM privatisation due January next year, is not understandable,” the official added.
"Whenever the mills touched its peak production levels – during the last 18 months – the gas supply was curtailed. The dues were comparatively higher in 2014, but it did not take such an action at that time.”