Govt rules out gas increase to KESC

After the clear refusal by Ministry of Petroleum and Natural Gas to enhance the gas supply to Karachi Electric Supply Company (KESC) which is run by Al-Abraaj Capital, a Dubai based foreign firm, KESC has started reminding the government about the ‘Amendment Agreement’ signed between the company and Ministry of Water and Power, under which, what the power company claims, the required fuel supply was ensured.
After the rejection of KESC’s demands for proving it allocated gas of over 270 MMCFD from Sui Southern Gas Company (SSGC) by the Federal Minister of Petroleum and Natural Gas Dr Aasim Hussain saying that KESC was already being provided with the required gas, the power company has reminded the government of the agreement signed with it. The Amendment Agreement, which was signed by the two parties in 2009 while amending the original agreement signed by the Privatisation Commission of Pakistan and Al-Jomaiah, the former management of KESC, provides multiple facilities to the foreign management of the company.
The agreement, originally signed between the Privatisation Commission and KESC in 2005, was amended in April 2009 on the request of the company by the Ministry of Water and Power on behalf of Government of Pakistan. In a recent statement the company has claimed “KESC’s demand for gas is not just a wish but based on firm government commitments and KESC would continue to press for supply of allocated and committed gas volume that was one of the most critical pre-requisites and an integral part of the ‘Amended Implementation Agreement’ signed by the government of Pakistan.”
However sources claimed there was nothing in the amended agreement regarding the fuel supply specially the supply of required gas to KESC.
Sources claimed that all unjustified demands of the company including additional gas supply, subsidised fuel, increase in tariff etc. were due to the amended agreement, the prime objective of which was to facilitate the utility by removing the cap on any increase in tariff for seven years agreed in earlier agreements.
Besides, they claimed, the demands made by KESC and facilities provided by the government were also in violation of rules as the Privatisation Commission of Pakistan was sidelined by the Ministry of Water and Power in the “Amended Agreement”. According to sources the amendment, if needed, should have been made by the commission which was the original party to the agreement.
They further said that the company has started criticising the government for not providing gas but on the other hand the company was not paying for the already supplied gas as the dues it owed to SSGC have swelled to over Rs30 billion. It was revealed that the company was also not paying dues worth billions of rupees to PSO, WAPDA and IPPs.
It is worth mentioning here that KESC in a statement on Monday has claimed that the utility’s new power plant at Bin Qasim being completed with a total investment of $450 million was yet to contribute towards the City grid because its commissioning had been delayed for non-supply of officially committed 130 MMCFD of natural gas while citizens suffered prolonged hours of load shedding. KESC asked the government to immediately arrange the promised regular supply of 130 MMCFD gas to the new plant as KESC had invested huge funds into power generation only after the government had guaranteed this gas supply in addition to 276 MMCFD for KESC’s existing plants. Currently, two of the three units are in testing phase; however, these tests are being delayed and compromised because of inadequate gas supply. Under the serious row between the government and KESC over the issue of gas shortage, the citizens of Karachi including the commercial and industrial sectors are braving acute unscheduled power shortages of over 12 hours daily.