The crisis stricken Pakistan Steel Mills (PSM) has decided to take legal action against Karachi Electric Supply Company (KESC) which has disconnected the power supply to the mill while broking its prior signed agreement with the mill.
KESC has disconnected the electricity supply to the country’s largest, state owned Steel producing plant- PSM, on Tuesday evening due to, what the company claims, non-payment of Rs 210 million dues. The country’s only steel mill which is already being run below 20 percent of production capacity for the last few months owing to huge financial losses and shortage of credit to purchase raw material, has also hard hit by the fresh move.
According to official sources at PSM, it was a deliberate treachery effort to damage the national exchequer as the company on legal way has no right to disconnect the supply in the presence of a mutual signed agreement. While strongly condemning the disconnection of power, they said that KESC and PSM have already signed a valid mutual business relation agreement in 1982 according to which both parties were agreed to provide services to each other, KESC would provide the electricity while PSM would charge right of way charges, water and gas supply charges to KESC stations.
According to its clause- 6© of this agreement: “KESC and Pakistan Steel will submit their respective bills to either party for billing month, by the end of the following month.30 days time will be allowed for the payment after submission of bill and acknowledgement of its receipt. In case bill is not paid within 60 days of the date of submission /acknowledgement, interest at bank rate will be paid by the defaulting party.”
It is clear from the agreement that in case of non payment from either party there is no disconnection of services. Besides, KESC provided the current bill of Rs. 210 Million for the month of Feb 2012 to PSM on 14th March 2012, with the due date of 20th March instead of 14th May 2012 of Rupees 210 Million, and then during negotiations for payment of the bill, KESC disconnected the electric supply of PSM which directly effected the production units and thickly populated residential area of Steel Town and Gulshan e Hadeed.
According to PSM KESC is an indebted organization of rupees 120 million to PSM, and not paid their bills from last several years, so how could they do such an act of disconnecting power supply to the national entity, while on the other hand PSM has paid all the previous bills for which even a single rupee is payable by PSM. They further said that the power disconnection cause a loss of about Rs. 120 Million per day to Pakistan Steel, as the important production units of PSM Hot Strip Mill and Cold Rolling Mills have been shutdown and major finished products of PSM cannot be produced and neither sold out. The spokesman said that KESC is solely responsible for this illegal act and the losses to national exchequer. PSMC management preparing to take legal action against KESC and to claim damages occurred due to disconnection of power. The officials of PSM said that this non professional and unethical act of KESC management shows that they do not realized that they have to pay about Rs. 120 Million to Pakistan Steel and PSM never tried to withdraw their facilities which shows a responsible behavior of PSM, also last year PSM is the one who provided advance billing to KESC for their fuel charges on their request.
