KARACHI: Sui Southern Gas Company (SSGC) has disconnected gas supply to Pakistan Steel Mills Limited (PSML) due to non-payments of huge outstanding amount.
According to SSGC, the total outstanding against PSML as at June 30, 2024 amounts to Rs 97.697 billion which includes late payment surcharge (LPS) amounting to Rs 73.4 billion.
SSGC said that PSML started partially defaulting to SSGC in making payments of monthly gas bills from November 2008 and completely stopped making any payment after March 2015. Subsequently, SSGC served various termination notices to PSML in July and August 2015 due to continuous default from the latter’s part. In addition, due to continuous default, SSGC gradually reduced its gas supplies to PSML from 21 MMCFD in FY 2014-15 to 02 MMCFD in FY 2015-16.
SSGC disconnects gas supplies to Pakistan Steel Mills Housing colony
SSGC however waived the disconnection notices several times in order to keep the Coke Oven Batteries of PSML intact and also to help achieve resumption of PSML operations in future revival plans.
Since then, SSGC has been continuing gas supplies to PSML at a quantum of 2 MMCFD with average billing value of Rs 100 million per month, but sadly payments from PSML remained erratic.
Upon consistent follow-up from SSGC, effective February 2020 onwards, PSML started making current monthly payments to SSGC in view of budgetary allocations/bail-out package release of funds to it from the Federal Government for making payments of SSGC gas bills.
Funds were, however, being released after lapse of considerable time, causing SSGC to bear the financial burden due to significant delays in payments.
Federal Government including Privatization Commission, Ministry of Industries and Production and Ministry of Energy (Petroleum Division) had been working on revival plans of PSML during various times and SSGC always supported the efforts of Federal Government primarily by continuing the gas supplies to PSML during this entire period.
A recent such development was initiated in 2021, wherein a proposal regarding transferring of PSML’s core assets and relevant land to a new subsidiary company was floated. SSGC remained active while safe guarding its interest to facilitate privatization process of PSM. Privatization process, however, did not materialize.
Through a written communication from PSML, SSGC was informed regarding a recent ECC meeting, wherein it was decided “that no further payment against consumption of gas supply to PSM will be made beyond June 30, 2024 so that no further liability of Federal Government against SSGC could accrue.” In view of the same, SSGC sought clarification from PSML and served Disconnection Notice.
However, PSM did not respond to SSGC’s notice and consequently SSGC after expiry of given deadline disconnected gas supplies to PSM while keeping in loop all relevant Ministries/federal government.
To reiterate, in order to support PSML’s revival efforts, SSGC has always fully supported the former by supplying it with gas against partial payments / delayed payments/non-payments. In fact, SSGC provided PSML several opportunities to honor its commitments.
However, PSML not only defaulted on payments of gas bills but also could not provide any palatable Payment Plan of its outstanding dues. Finally, Federal Government also decided to discontinue its financial support to PSML to settle its payments to SSGC. SSGC was thus left with no option but to discontinue gas supplies to PSML on July 4, 2024, later in the night.
It must be mentioned here that total outstanding against PSML as at June 30, 2024 amounts to Rs. 97.697 billion which includes Late Payment Surcharge (LPS) amounting to Rs. 73.4 billion. It is pertinent to mention that outstanding principal amount is being accumulated since 2008 due to non-payment/partial payments by PSML.
Copyright Business Recorder, 2024
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