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January 22, 2021

SSGC ‘sets record straight on dues’ issue and fresh GSA’

Karachi

 
January 22, 2021

The Sui Southern Gas Company (SSGC) has rejected the assertions made by CEO K-Electric Moonis Alvi the other day related to the dues the power utility owes to it as well as the KE’s perspective related to a fresh gas supply agreement between the two companies.

In a statement issued on Thursday, it said: “SSGC reiterates, as it has many times in the past, that it has always shown utmost seriousness in ironing out contentious issues with KE including the signing of a valid GSA with the power company, even though over dues KE owes to the gas utility has now crossed Rs. 122 billion, and not Rs. 13.7 billion as CEO KE asserts.

“SSGC has always maintained that a very vital issue of growing over dues need to be sorted out before the Company inks a fresh GSA with KE. SSGC maintains that contrary to the CEO KE’s assertion, the main reason behind lack of progress in signing [the] GSA has always been due to KE’s reluctance to abide by 2018 decision of then Cabinet Committee on Energy (CCOE) wherein the CCOE directed for the finalization and signing of Terms of Reference (TORs) for the settlement of dues between SSGC, KE and Karachi Water and Sewerage Board that has been pending for way too long.”

The statement further said: “The TORs, initialed by the MDs of both the Companies (SSGC and KE) in April 2018, involved engaging an independent reputable Chartered Accountant Firm for the purpose of determining the actual overdues figure KE owes to SSGC. While SSGC had sent TORs to KE in August that year, the later, to this day, has been reluctant to counter-sign the same. In fact, when SSGC exerted pressure on KE to execute the TORs for reconciliation, in June 2018, KE went to the Sindh High Court.

“Recently, NEPRA conducted an inquiry on excessive loadshedding and also prevailed on KE to sign on ToR to move forward. The Ministry of Energy has remained in picture on the developments related to the above issue since 2018 and very recently as per NEPRA directives, SSGC referred the matter of implementation of CCOE decision of April 23, 2018 once again to the concerned quarters in Islamabad.

“Moreover, SSGC is keen and interested in augmenting the infrastructure to facilitate KE’s new Bin Qasim Power Complex simply because it wants to address the sufferings of the people of Karachi.

“Despite the fact that the only GSA between the two utilities is of 10 mmcfd, SSGC has always provided much more gas to KE than the GSA allocated amount so as to avert power outages in the city of Karachi.

“While currently SSGC is providing on average 70 mmcfd gas to KE, last summer it provided 270 mmcfd plus gas to the power company due to greater gas when KE failed to arrange alternate fuels for power generation (FO / Diesel). Backing away from its commitment to serve the people of Karachi does not figure in SSGC’s scheme of things. KE on the other hand need to show greater flexibility in sorting out contentious issues with SSGC including that of a new GSA, rather than harping on the same old tune.”

What KE says

A day earlier, the K-Electric had tied the test-running of its new power plant to the supply of 150 million metric cubic feet per day (mmcfd) from the SSGC.“We will be test running the first unit of the 900MW plant this March-April provided we get the 150mmcfd,” Moonis Alvi, chief executive officer of the KE, said during a briefing.

“KE has to pay SSGC Rs122 billion against gas supplies till 2012, while they admit the liability of Rs22 billion only,” Shabaz Aslam, a spokesperson of the SSGC told The News.

A KE official said the KE could not pay the SSGC because it didn’t receive from federal and provincial governments. “Moreover, if SSGC is imposing mark-up, KE should also impose the same rate on government receivables,” said the official.

The KE claims the principal amount payable is only Rs13.7 billion while an additional Rs102 billion is just mark-up and surcharge. The KE has Rs220 billion of receivables as tariff differential claims and another Rs12 billion from federal government.

Further, another Rs29 billion are receivable from Karachi Water and Supply Board, Rs3 billion from Balochistan and Rs12 billion from Sindh.

Alvi hoped that the utility would get gas for the 450MW plant as it already received all the approvals and licences to lay the pipeline.

“The first unit of K-Electric’s RLNG-based 900MW (450x2) plant would be ready and tested by April this year enabling the utility company to shut down its 210MW fuel oil based inefficient plant by the end of 2021,” he said.