Finally! SSGC, KESC to sit together… but will there be light at the end of talks?

The management of Sui Southern Gas Company (SSGC) and Karachi Electric Supply Company (KESC) have finally decided to sit together on Monday for finding a solution to the bilateral issues facing the two organisations like non-payment of dues, short gas supply and purchasing agreements, Pakistan Today has learnt.
The Board of Directors of SSGC and KESC have agreed to hold a joint session at the SSGC’s Head Office on February 20 (tomorrow) in order to resolve the issues of common interest, sources told Pakistan Today.
The two utilities constantly blame each other for not conforming to the agreed conditions both in terms of gas supply and payment against purchased gas.
However, according to the sources, the two parties may hardly find a way out as neither the KESC is willing to pay the dues it owes to the SSGC nor the latter is in the position to ensure the required gas to the former.
The SSGC claims that currently the power utility is defaulting on at least Rs 38 billion to the gas company.
Meanwhile, the initiative of the meeting was taken by the chairman and directors of the SSGC, who invited the KESC’s Board of Directors to discuss and resolve the issues mutually. “The KESC chairman and directors readily agreed to the invitation,” the sources said.
While the SSGC complains that the non-payment of dues by the KESC is creating a severe financial crisis at the gas utility, the power company also complains about not being supplied the allocated 276mmcfd of gas from the SSGC.
Sources in SSGC, however, deny the KESC’s claim of having an agreement. “The allocation of gas by the authorities in Islamabad was not an agreement but temporary arrangements made for the power company’s requirements to minimise electricity load shedding across the metropolis,” they said.
Moreover, the KESC is avoiding the security deposit of at least Rs 10 billion needed for any gas agreement. “The power utility had itself applied for enhancement of security deposits in the National Electric Regulatory Authority (NEPRA), but is reluctant to honour its own dues to the SSGC,” the sources said.
Both the SSGC and KESC administrations are charging their respective consumers of security deposits worth at least three months’ of supply.
The SSGC, meanwhile, despite depleting natural gas production and increase in demand, is supplying almost 120mmcfd gas to the KESC – lower than the over 150mmcfd supplied to the power company during the summer last year – but with the KESC demanding a fixed gas supply, the gas utility is also showing reluctance in signing an agreement.
Besides the government’s allocated 276mmcfd gas to its plants from SSGC, the Abraaj-led KESC management also demands that the gas company shifts the 175mmcfd gas supplied to industries towards power generation.
The KESC claims that power outages in Karachi will end if the SSGC adds the said volume of gas to the KESC’s power plants, thus providing cheaper electricity to all residential, commercial and industrial consumers.
According to the sources, there is something fundamentally wrong with the gas allocation policy as shortage of gas in the system is not an issue.
“The gas consumed at captive plants of some industries can be shifted on to KESC’s gas-fired plants to generate more electricity while benefiting all consumers through natural resources,” the sources said.
The KESC alleges that the government is meeting the needs of a handful of industrial units and CNG stations at the cost of the electricity requirements of 20 million people of Karachi, whose life is immensely affected because of prolonged load shedding hours due to gas shortfall to KESC’s generation plants.