SSGC threatens swift action against KESC

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Taking serious notice of receivables over Rs28 billion from only Karachi Electric Supply Company (KESC), the Board of Directors of Sui Southern Gas Company (SSGC) has instructed its management to take extreme steps against KESC.
As the only power supply company of the city with over two million consumers is not paying for the gas it receives from SSGC, making dues swell to over Rs28 billion, the board of the gas company on Thursday directed its management to take any means necessary for early recovery of the amount as the company was facing a huge financial crisis.
Though Petroleum and Natural Affairs Minister Dr Asim Hussain had earlier forced SSGC to keep supplying gas to KESC despite non-payment of dues, with enhanced supply of at least 20 MMCFD making total supply of 200 MMCFD to the power company, the Sui Gas company was not in a position to continue the supply, sources said. Interestingly Dr Asim, who forced both SSGC and Pakistan State Oil (PSO) to keep supplying fuel to KESC despite non-payment of dues to both fuel suppliers, had also claimed that the issue would be resolved later. But, sources claimed, no progress has so far been made on the part of the petroleum ministry to resolve the issue and the non-payment of huge receivables has created problems for SSGC for even the disbursement of salaries of its employees. The fresh move came from SSGC after the intervention of Dr Asim for resolving the payment and gas curtailment issues between the two companies last month. After the joint meeting held here at Governor House, gas supply to KESC was enhanced to 200 MMCFD with providing subsidised furnace oil from PSO. Prior to the meeting both PSO and SSGC had threatened to stop supply if the dues were not cleared.
The issues of gas curtailment and non-payment of dues were being created due to the absence of any agreement for both payment and purchase of gas between SSGC and KESC. However, sources in SSGC claimed that there was payment agreement signed between the two companies for the last two years. According to available documents, KESC was not paying dues regularly since June 2009 and despite a payment agreement signed between the two companies on June 30, 2009, the due amount that was initially around Rs12.23 billion swelled to Rs28.681 billion as on July 31, 2011. Under the agreement, which was singed by heads of both companies, it was ensured that the dues would be cleared in various installments and interest would also be paid in case of delay. According to the agreement, a copy of which was made available to Pakistan Today, “KESC has also agreed to pay the monthly bill within due date or latest by the end of the month in which bill was issued. The agreement further said “KESC acknowledges SSGC’s right to curtail supply of gas for delay beyond this extended time.”