ISLAMABAD (February 20 2007): The Sui Southern Gas Company (SSGC) has declined payments of billions of rupees to three public sector exploration and production (E&P) companies - the Oil and Gas Development Company (OGDC), Pakistan Petroleum Limited (PPL), and Government Holding (Pvt) Limited (GHPL), making it hard for them to meet their financial requirements for future plans.

SSGC gets gas from the private and public sector E&P companies for its system and is supposed to make prompt payments to all its sellers, without any excuse.

But it stopped payments to the public sector exploration companies from August last year and, since then, a series of meetings at different levels could not succeed to persuade it to release the outstanding payments.

SSGC owes over Rs 9 billion to the public sector oil and gas sector entities, with over Rs 4 billion major share to go to OGDC. Next comes PPL with Rs 2 billion. Similarly, GHPL is also facing financial crunch due to non-payment of outstanding amount of Rs over Rs 2 billion from SSGC.

Another problem faced by the aggrieved E&P sector is that they were paying 15 percent GST to CBR on the income without getting even a single penny from SSGC for the last seven months.

In its recent communiqué to the Petroleum ministry, SSGC confirmed that it was making regular payments to the private sector oil and gas exploration and production companies but was only withholding dues of public sector E&P companies. SSGC links payment of the outstanding amount to receiving billed money from Karachi Electric Supply Company (KESC). Its officials argued during the meetings that it can not pay outstanding amount to public sector companies unless it gets billed money from KESC, which is its single largest consumer.

KESC has its own complications. It was unable to pay some portion of its payments to SSGC for not getting bills from government departments.

Sources said a number of Sindh government departments were chronic defaulters on payments to KESC, and repeated assurances could not bring any positive result.

KESC was divested as it was not performing well over the years and the authorities thought that private sector may turn it into a profit-making entity. But the new management is facing serious problems such as non-payment of bills from a large number of consumers as well as the government departments and theft of electricity. The situation, if went unnoticed, would definitely aggravate the problems of KESC buyers who injected money to get profit from their investment besides adding to power crisis for Karachiites.

Copyright Business Recorder, 2007