ISLAMABAD: Sui Southern Gas Company Limited (SSGCL) is reportedly facing a severe financial crunch due to non-payment of RLNG bills by Karachi Electric (KE) which have reached over Rs 27 billion.
In a letter to the Power Division, Directorate General of Gas (Petroleum Division), it has intimated that the gas utility company’s outstanding dues against KE have been piled up to an alarming level of Rs. 27.013 billion (excluding LPS of Rs. 2.645 billion) and this situation is detrimental for sustainability of the Company and may jeopardize its overall financial structure.
Further due to delay in release of outstanding amount, SSGC is unable to make timely payments to SNGPL against RLNG being consumed by KE; resultantly, SNGPL is unable to timely clear invoices of LNG purchases from PSO and PLL.
Directorate General of Gas is of the view that in order to keep PSO and PLL afloat for meeting payment obligations to LNG suppliers during ensuing winter, Petroleum Division has once again requested Power Division to advise the concerned quarters, i.e., CPPA-G and KE for early release of outstanding amounts against LNG consumed by KE.
On October 19, 2022, Managing Director, SSGCL, Imran Maniar wrote a letter to Chief Executive Officer (CEO) KE Syed Moonis Abdullah Alvi and brought alarming level payables to his notice.
MD SSGCL in its letter reiterated that several reminders and correspondence have been done at various forums regarding KE’s continuous default on current RLNG bills. However, the power utility company has failed to make SSGC outstanding payment against RLNG bills. In this respect, MD SSGCL informed that KE has only made payment of Rs. 31.995 billion against RLNG bills of Rs. 59.008 billion leaving a massive outstanding balance of Rs. 27.013 billion (excluding LPS of Rs. 2 645 billion) up to October 15, 2022.
According to Maniar, SSGCL has already stated that through earlier correspondence to the concerned quarters and CEO KE that his company’s default is causing delay in SSGCL ability to make timely payments to SNGPL against RLNG retention, thereby causing disruption in RLNG supply chain, which could result in sovereign country default.
SSGCL management through its letter reminded KE to clear its outstanding receivables immediately along with LPS as per the directives of Sindh High Court; otherwise, the gas utility company would exercise the option of drastic curtailment of gas supply to KE, based on contempt of Sindh High Court order keeping in view the continuous default by KE on making payment of RLNG bills.
On August 4, 2022, Directorate General of Gas( Petroleum Division), in a letter to Power Division had cautioned that due to financial constraints owing to delay in payment of RLNG bills by KE and in order to meet commitments with SNGPL, SSGC proceeded with encashment of bank guarantee provided by KE as security deposit to mitigate adverse financial implications to RLNG supply chain and international default by the LNG buyers namely PSO and PLL; however, KE obtained stay order against encashment.
SSGC has been in continuous communication with the KE pursuing payment of outstanding dues but the power utility is associating its default in payment of RLNG over dues with non-receipt of Tariff Differential Subsidy (TDS) from the federal government.
In this regard, SSGC has apprised that KE default as of August 01, 2022 has reached the amount of Rs 26 billion (including LPS of Rs 900 million) leading to a situation beyond SSGC control whereby SSGC will be constrained to gradually reduce gas supplies to KE.
Copyright Business Recorder, 2022
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