The heat in Karachi and that between K-Electric (KE) and Sui Southern Gas Company (SSGC) has gone up simultaneously. Both companies took the war to social media, blaming each other for the recent surge in load shedding across the metropolitan. This is nothing new, and has been going on since at least 2010. The federal government was seen taking sides with the SSGC, whereas, the CM Sindh was found in agreement with KE’s stance.
This article is not about fixing the responsibility on either; such is the nature and extent of litigation between the two. Even the courts have not been able to assert. Who holds the rightful claim? So best leave this bit to the better judgment of the courts. Both the sides claim they have “strong” cases. SSGC demand KE to pay the Late Payment Surcharge (LPS) accrued over the years. KE, on the other hand, has a case of its own against the SSGC, asking the gas distributor to pay for the losses that KE suffered on account of SSGC’s non-compliance with supplying “committed” quantity of gas.
KE maintains SSGC is under “legal obligation” to supply a committed quaintly of 276 mmcfd of natural gas. SSGC maintains there is no “gas supply Agreement” with KE, and that the KE has failed to ink one, despite several reminders and requests. KE opines the “agreement” required it to make payments only if SSGC commits to the full quaintly of supply. SSGC’s version is the exact opposite, stating it was only supposed to supply the agreed amount, only if KE pays on time.
The argument that KE is not getting the same treatment on amounts receivable from various government entities, holds dome ground. SSGC’s claim that KE had itself acknowledged and recognized the same LPS treatment in its books earlier also holds ground. Someone here, is telling the truth. Leave it to the honourable courts to find that truth, and ensure the aggrieved party gets adequately compensated.
But the fact that KE, to date, has not even entered a formal long-term GSA with SSGC, for a raw material it heavily banks on, is sheer incompetence. It may be down to lot more technicalities, but merely building the case around an ECC approved decision, does not sell as a good enough reason. Some say that KE is reluctant in agreeing to pay for a gas mix that has LNG, as it is priced considerably higher than natural gas.
Under normal circumstances, this should have been an easy decision for KE. Ensure gas supply, generate more power, and earn more. If only things were that simple. However pass through an item LNG cost maybe, it stands to disturb KE’s liquidity, stemming from likely delays in increased subsidy requirement, and a likely higher loss due to higher price.
SSGC on the other hand claims that the domestic demand has “increased substantially”. Now that seems an unreal claim, for domestic sector’s gas demand to have increased “substantially” in 40 degree Celsius. Or it could be an admission that power generators for domestic use are being run on natural gas, which is another failure on demand side management.
Either way, the whole thing is a mess. And Karachi stands to suffer. It would be ideal, if the “agreements” between KE and SSGC, and those between KE and government, are made available. The whole episode also tells why the centralization of affairs in the entire energy chain is a must, which calls for a National Energy Authority. Oh, and did we just say “ideal?”
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