KARACHI: The Karachi Electric Supply Company (KESC) has paid Rs 3.0 billion out of over Rs 24 billion it owes to Sui Southern Gas Company (SSGC). The payment allows the KESC to continue receiving gas supply from the gas supplier.
SSGC had recently warned KESC that in event that the organisation failed to honour its outstanding dues immediately, its gas supply was in danger of being discontinued. The electric supply company has made the payment of dues incurred in the course of last month, sources told Pakistan Today.
According to them, the managing director of SSGC, in an informal meeting with the chief executive officer (CEO) of KESC had made it abundantly clear that the KESC would suffer imminent gas cuts if the outstanding dues were not cleared soon.
The KESC which has consistently complained for the limited supply of gas it receives has not paid its dues to SSGC on a timely basis, which, sources claimed, has swelled to over Rs 24 billion. Though the public utility organisation now privately in private hands has made its payment for only one month, SSGC has maintained supply during December 2010.
However the situation for the gas supply company remains precarious. According to recent data released by SSGC, deferred payments to the company have now reached alarming proportions.
Other significant entities heavily indebted to SSGC include Wapda (JPCL), Rs 7.237 billion; Wapda (Quetta), Rs 467 million, SNGPL, Rs 4.523 billion and Pakistan Steel Rs 2.149 billion, respectively. Sales tax receivables stood at Rs 4.510 billion. The company’s total receivables were Rs 40.528 billion.
In turn SSGC has been forced to delay its own payments, particularly to other entities in the public sector. SSGC’s payables were as follows: OGDC, Rs 13. 974 billion, PPL, Rs 7.088 billion, GHPL, Rs 6.464 billion and gas development surcharge, Rs 2.700 billion.
SSGC facing a liquidity crunch had asked the KESC to clear all dues at the earliest possible time, to bring down financial cost and undertake revamping of its network to bring down UFG percentage.
According to sources though KESC has temporarily managed to maintain the supply of gas; SSGC was still demanding the clearance of all outstanding dues with regular payment of the monthly bills in prompt manner.
Interestingly, KESC, which relies more on the supply of gas and electricity from SSGC and WAPDA respectively. The company is reluctant to pay the dues to both organisations, terming it an unresolved circular debt issue.
It is worth mentioning here that the circular debt was the primary issue hampering liquidity across the oil and gas and power sectors. Various solutions are often raised to address the issue, but resolve to implement is apparently lacking.
