ISLAMABAD: Karachi Electric (KE) has urged Sui Southern Gas Company Limited (SSGCL) to immediately start supply of up to 70 MMCFD of indigenous gas as per decision taken at a meeting held at Petroleum Division.
This was recommended by Chief Executive Officer (CEO) Syed Moonis Abdullah Alvi, CEO KE in a letter in response to a letter written by Managing Director SSGCL, Imran Maniar to the power utility on the matter of overdue current bills of RLNG supply by SSGC.
CEO KE, in his letter has claimed that it has been making payments against current dues to SSGC from 2012 till May 18, 2022 and during that period has made payment of Rs 575.4 billion against billing of Rs 561.9 billion which has helped reduce the overall balance payable by Rs 13.5 billion.
Further, out of the amount of Rs 30.1 billion against the bills of May-June 2022 till to date, KE has been able to pay Rs 14.6 billion, which is already in excess by Rs4.8 billion as compared to the RLNG rates for the same months in 2021.
The amount of Rs 15.5 billion remain outstanding due to the fact that the RLNG prices for May-June 22 have inflated almost three times as compared to the RLNG prices for May-June 21. As highlighted through various correspondence and discussions at multiple levels and forums, due to increase in KE’s Tariff Differential Subsidy claims outstanding from the Government of Pakistan (GoP) and KE’s inability to borrow from the banks, KE has been unable to make full payments of current bills to SSGC.
Furthermore, KE has also brought to the notice of Managing Director SSGC that as overdue balance is only due to non-release of Tariff Differential Subsidy (TDS). KE would not acknowledge or pay any mark-up on the unpaid amount.
According to CEO KE, non-provision of local gas by SSGC to KE is one of the major factors for accumulation of TDS as RLNG is five times more expensive than local gas which has also resulted in increased burden on consumers in the form of Fuel Charge Adjustment (FCA) and GoP in the form of Tariff Differential Subsidy.
“We assure you that we remain in continuous engagement with relevant stakeholders for earliest release of tariff differential subsidy to enable KE to clear the outstanding overdue current bills and also urge you to ensure supply of local gas to KE, which would help reduce the burden on consumers in the form of FCA and GoP in the form of reduction in tariff differential subsidy,” said CEO KE in his letter to MG SSGCL.
With reference to the meeting of SSGC, KE and Ministry of Energy on June 3, 2022 chaired by Secretary Petroleum Division, Ali Raza Bhutta, in which the issue of non-supply of indigenous gas to KE was deliberated, it was decided that SSGCL would take immediate steps to supply 60 to 70 MMCFD of indigenous gas in the total gas supply to KE, which is essential to overcome the cash flow constraints being faced by KE, minimize the subsidy burden on GoP and rationalize the high cost of power generation to provide relief to the people of Karachi, CEO KE claimed.
“The power utility has urged Managing Director SSGCL to immediately start supply of 60-70 MMCFD quantity of indigenous gas to KE,” Alvi maintained.
MD SSGCL, in his letter stated that even after a number of reminders and correspondence at the higher forum, KE has not released SSGC outstanding payment against RLNG bills.
He said, in fact, the amount of default has increased to a staggering level of Rs 15.712 billion (including LPS Rs 203 million).
KE has paid only Rs 4.740 billion during the month of June 2022 against overdue RLNG bills of Rs 20.452 billion leaving an outstanding balance of Rs 15.712 billion, he added. “KE default is causing delay in SSGC ability to make timely payments to SNGPL against RLNG retention thereby causing interruption in RLNG supply chain,” he said, reiterating that KE at least should pay the RLNG bill with the old price, in order to keep the RLNG supply chain intact.
MD SSGCL said that through this letter, SSGC Management once again approached CEO KE to clear outstanding receivables immediately as per the directives of Sindh High Court; otherwise, SSGC would exercise the option of disconnection/ curtailment of gas supply to KE based on contempt of Sindh High Court order.
Copyright Business Recorder, 2022