Resolution of dispute in sight: Counsel for SSGC, K-Electric to draft ToRs

The government is likely to improve gas supply to K-Electric with the approval of Prime Minister, as both sides have agreed to draft Terms of Reference (ToRs) to sort the volume of outstanding dues of SSGCL against the power utility, informed-sources told Business Recorder.
"The legal teams of SSGC and K-Electric will sit together immediately to draft ToRs on the basis of which a charted accountant firm will be hired to finalise the outstanding amount against KE," the sources added.
It was observed that soon after the meeting, the KE team led by its CEO, Tayyab Tareen, rushed to the office of Joint Secretary (Power Finance) Zargham Eshaq Khan to hold initial discussions on the ToRs. Petroleum Division was represented by Additional Secretary, Hasan Nasir Jamy .
Minister for Power Division, Sardar Awais Khan Leghari who presided over the inter-ministerial meeting, told media that KE owes Rs 70-80 billion to SSGC, adding until this dispute is resolved or a formula agreed, gas supply will remain an issue. He said that gas cannot be supplied without any agreement.
"We want the issue resolved as early as possible but how can gas be supplied to KE without any gas sale purchase agreement," he added.
He maintained that the government will not be blackmailed by the power utility.
The Minister said that Petroleum Division, Power Division and KE held a detailed discussion on the issue of outstanding dues. He said similar issues are highlighted in the meetings which are being mentioned in the media.
Leghari said the government disconnects electricity to a poor consumer who uses only 300 units and when the company like KE does not pay billions of rupees, why should its gas supply not be curtailed.
KE argues that a payment mechanism should be prepared for Karachi Water and Sewerage Board (KWSB).
"We have agreed that SSGC and KE will formulate a payment formula whereas Finance Ministry will facilitate resolution of outstanding dues of KE against KWSB (Sindh Government)", he continued.
"SSGC's outstanding principal amount against KE is Rs 13 billion whereas Rs 60-70 billion is Late Payment Surcharge," he maintained. The Minister stated that whatever is agreed between the two utilities, gas will be supplied in accordance with new GSPA.
"We are about to ask the Sindh government to sort out issues with KE so that people of Karachi do not face hardships," he further stated. Answering a question, he said that 650 MW is being supplied to KE which is meant for the people of Karachi as the federal government is sensitized about this city. Mian Shahbaz Sharif who is the President of PML (N) also visited Karachi recently and directed the resolution of this issue as early as possible. The Minister added that there is no precedent in history where a dispute was resolved in an emergent meeting.
He said the Prime Minister held a meeting last Sunday and directed that this issue be sorted out but unfortunately this was not done because KE has issues. However, now sense will prevail and whatever is agreed rationally, the government will move ahead.
"The amount of Rs 60-70 billion is the peoples' money, and we will not be blackmailed at any cost and I guess KE also will not have any such intent after today's meeting," Leghari added.
Commenting on the threat of Chief Minister Sindh Murad Ali to participate in a sit-in called by all the Sindh based political parties in front of Prime Minister's House, Minister for Power said, KE and SSGC held a meeting with him on April 5, 2018 in Karachi during which he recognized that it is an issue. The threat of a sit-in may be just 'drama' in front of television cameras, considered necessary before the general elections.
"Murad Ali Shah should activate police of his province so that poor people of Hyderabad and Sukkar who pay their bills should get electricity which is not being supplied due to theft and then think of a sit-in in front of PM House ," he said.
Answering another question, the Minister said that M/s Shanghai Electric Power (SEP) is a mature investor buying the power utility. It is a deal between two private companies and the government has no role in it. The government has provided friendly environment to investors and will continue to do so.
To the query that as KE invariably approaches the court against a government decisions that it opposes and, if in this case the utility decides to go to court, what will be government's reaction the Minister replied: "May God have mercy". He said Nepra is an independent regulator and did not participate the meeting.
An official told Business Recorder that Minister will contact the Prime Minister who is in presently in London, to seek his guidance with respect to restoration of gas to KE to mitigate the hardships of Karachi as time is required to finalise an agreement between KE and SSGC on gas supply agreement and payment of overdue amount.
Chief Executive Office KE, Tayyab Tareen hoped that the issue will be resolved soon. He further stated that the ECC had approved 270 MMCFD not 10 MMCFD, gas for KE.
No increase in gas supply to K-Electric even today. KE has been chasing SSGC to sign GSA for to sign 190 mmcfd in line with National Gas Allocation Policy but SSGC remains reluctant. KE has and continues to pay monthly gas bills and remains committed to settle outstanding principle amount of PKR 13.7 billion. We have even provided 3 month security deposit that they had earlier demanded but unfortunately all this doesn't seem to be enough for SSGC. They insist on recovering sub-judice amounts to the tune of PKR 60bn related interest and LPS. The very basis of the calculation of these amounts is under question in a court of law so how is this demand of SSGC legitimate? How is this valid pre-condition to sign GSA?