Financial crunch: KE demands clearance of TDC net difference

ISLAMABAD: K-Electric (KE) has cautioned the federal government that it has reached an alarming and unsustainable level of bank borrowings and will not be in a position to clear over-dues unless the net difference of its KE demands clearance of Tariff Differential Claim (TDC) net difference TDC amounting to Rs 25.6 billion is cleared, sources close to Chairman NEPRA told Business Recorder.

The power utility shared its financial position with the Minister for Finance Dr. Miftah Ismail, Minister for Power Khurram Dastgir Khan, Minister of State for Petroleum Dr. Musadik Masood Malik, NEPRA chairman and other concerned authorities.

KE, in its letter, sought attention of ministers and other relevant authorities to a letter from SSGC addressed to the Ministry of Energy threatening discontinuation of supply of RLNG to Karachi’s power supply, citing non-payment from KE and overdue outstanding amounts.

“While SSGC may appear to be well within its right to do so, I would like to take the liberty to highlight that they continuously violate the understanding achieved after months of dialogue, led by various federal and provincial forums, cabinet-level meetings and court orders by billing KE on RLNG without fulfilling the 130 mmcfd minimum indigenous gas requirement,” said CEO KE, Syed Moonis Abdullah Alvi in the letter.

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KE has also shared its earlier letters written in May 2022 and June 2022 to the members of the provincial and federal government, whereby the power utility categorically stated that its Tariff Differential Claim (TDCs) remain pending for urgent and immediate release in various departments of the government.

KE CEO said that the resulting cash flow constraints have been highlighted at multiple meetings and have also been raised by the all the concerned Ministries at a federal level.

“We welcome your intervention and hope for some positive developments on our request for release of our pending, legitimate claims,” he said in the letter addressed to ministers, concerned federal secretaries and chairman NEPRA.

Sharing interim steps to deal with current situation, KE CEO said that the power utility is making all possible endeavours to make current payments to SSGC and has cleared Rs13.7 billion in the last 66 days, as well. However, the utility has reached an alarming and unsustainable level of bank borrowings and will not be in a position to clear the over-dues unless the net difference of its TDC, after adjusting liability on account of the supply of power from Central Power Purchase (Guarantee) Limited (CPPA-G) - is released.

The net difference stood at around Rs. 25.6 billion. According to the CEO, SSGC has recently unilaterally charged a mark-up of Rs474 million on the current overdue amount while there is no agreement in place allowing them to do so. KE has already written to SSGC that this mark-up will not be acknowledged. If KE was being supplied indigenous gas, this mark-up would not have arisen.

Moreover, KE will not be compensated for the delay in the release/ processing of KE’s TDC and is not in a position to pick up this cost.

“We once again reiterate requirement of provision of at least 130 mmcfd indigenous gas to supply affordable electricity to Karachi and only quantities over and above 130 mmcfd may be billed as RLNG,” CEO said. adding that unfortunately SSGC continues to ignore this request and has threatened to cut off supplies.

KE contended that if SSGC reduces or curtails the supply of RLNG, 90% of KE’s current gas-based power generation will be at risk of becoming unavailable and result in exponential increase in load shedding in megacity including industrial areas. “We urge the federal government and associated ministries to step in urgently to release KE’s legitimate payments so we can continue supplying power to the city,” he concluded.

Copyright Business Recorder, 2022