KESC says Rs28bn payable to SSGC

KARACHI: Karachi Electric Supply Company said on Sunday that the total amount payable by KESC to SSGC is Rs28 billion and not Rs39bn, as being claimed by SSGC.

It further clarified that this amount is mainly to be settled against the Rs18bn payable by the Karachi Water & Sewerage Board (KWSB) to KESC, as agreed; since both are state owned entities.

The power utility said that it is quite unfortunate that SSGC keeps referring to non-existent supply agreement, while the fact of the matter remains that SSGC has been shying away from KESC's offer to sign a Gas Sale Agreement (GSA).

KESC has historically offered a number of times for SSGC to sign a GSA for 400mmcfd of gas supply to its generation plants, which will not only ensure the reduction of load shed in the city, but will also help in reducing the end user power tariff, by reducing the supplemental reliance on the 370pc more expensive furnace oil.

Currently KESC is being supplied approximately 50pc of its natural gas requirement, which is a loss not only to KESC in terms of idle capacity, but also tantamount to public disservice since KESC is in a position to increase it power production, provided that SSGC steps up to the task.

KESC stated, that in the interest of its power consumers and the city dwellers at large; it is willing to extend its hand to SSGC as a gesture of goodwill and agree to work on an expedited payment plan for the clearance of dues, provided that SSGC also reciprocates in public interest and agrees to sign a Gas Sale Agreement (GSA) for the provision of 400mmcfd of gas to KESC.

The power utility further disclosed that since September 2008, it has paid an accumulated amount of Rs96bn to SSGC.

Importantly another key fact that cannot be ignored is that the Federal and Provincial Government Departments and entities themselves owe KESC in excess of Rs76bn, creating massive cash flow issues for the power utility.

Also reflective of the fact that the Government Receivables are significantly higher than the Rs28bn payable to SSGC, which can be easily adjusted by the Ministry of Finance.

Lastly KESC stated that any decrease in its gas supply by SSGC, will be counter-productive to the interests of the residents and industrial and commercial activities of Karachi, since it will lead to an increase in load shed.