The Karachi Electric Supply Company (KESC) has served a seven-day notice of power supply disconnection to the Karachi Water & Sewerage Board (KWSB) over non-payment of dues that had swelled to Rs 16.6 billion by last month.
Through a letter dated February 16, the power company informed the managing director of the water utility that a sum of Rs 16.6 billion has been accumulated as net outstanding dues up to January 2012 against the KWSB due to non-payment of electricity dues.
“In order to affect recovery, your supply is liable to be disconnected under Section 24(1) of the Electricity Act-1910. We hereby advise you to pay a minimum amount of Rs 1 billion within the next seven days of the notice. Upon the expiry of the mentioned date, power supply to all KWSB facilities, including the pumping stations, will be disconnected without further reference on the subject matter,” said the letter.
According to sources, the failure of payments among government and semi-government organisations is due to the unresolved circular debt, which has swelled to over Rs 300 billion.
Sources said due to the unresolved debt issue, the KESC itself has been unable to disburse over Rs 30 billion it owes the Sui Southern Gas Company (SSGC).
The government and the organisations concerned are yet to find a way out of the circular debt issue, added the sources.
It is worth mentioning here that in a letter dated October 20, 2011, sent to the secretary of the Finance Ministry, the KWSB had requested the ministry that as the dues it owed the KESC had swelled to Rs 14 billion and its receivables from the federal government’s departments had also reached the same amount, the ministry should urgently resolve the issue through an adjustment mechanism.
To resolve the circular debt issue, the KWSB requested in a letter that its outstanding dues be released through the federal adjuster and be paid directly to the SSGC to offset the KESC’s dues to the gas utility.
The water utility said this would help the power company receive adequate gas supply from the SSGC, which is essential in meeting the increasing electricity demand of the KESC’s consumers, including the KWSB’s pumping stations.
In the letter, the water utility said due to its current financial situation, it is unable to affect payment to the power company, leading to increasing payables, which in turn resulted in the KESC disconnecting electricity supply to various facilities of the KWSB.
The water utility confirmed that an amount of Rs 14 billion, excluding surcharges, has been accrued with respect to outstanding payment for utilisation of power supplied by the electric company up to September 2011.
According to the letter, the KWSB’s receivables due from various departments of the federal government are approximately of the same magnitude.
“To address the dire situation, we are making a payment of Rs 50 million immediately and Rs 50 million by the end of October 2011. For future payments, a meeting under the chairmanship of the Sindh governor is scheduled at the Governor House to agree upon a payment plan,” the letter said.
The KWSB further said, “We are already increasing our monthly collection from our customers and have also made some significant efforts, leading to increase in revenue. Considering the aforementioned problems, we request for urgent action in this regard.”
