ISLAMABAD, July 29: The Pakistan Petroleum Limited (PPL) has issued a gas supply disconnection notice to Wapda for continued default on payments. If the supply of gas is disconnected to the power utility, it could suspend power generation from the 1600-mw Guddu Thermal Power Station.

A senior official in the power ministry confirmed to Dawn on Monday that the Water and Power Development Authority had been issued a gas termination notice by the PPL a day earlier, and a copy of the notice had also been dispatched to the federal government.

The official said the matter had been taken at the top level and the Chief Executive Secretariat in consultation with the secretaries of power and finance and petroleum ministries, who were in contact to make some payments to the country’s largest gas consumer.

“We have issued them a notice as a last resort and no body is going to help Wapda except full payments as agreed to with the federal government”, a senior PPL official told Dawn on Sunday.

The official said Wapda had made commitment with the federal government in March to make all current payments in time, plus a portion of long-outstanding Rs4.5 billion to the petroleum company in monthly instalments, but the promise had not been honoured.

In March, PPL — the largest and pioneer gas producer in the country — had issued a one-week notice for termination of gas supply to Wapda, but the federal government intervened to avoid loadshedding.

The power ministry official, however, ruled out any reduction in power generation, saying that Wapda had contingency plans.

He said Wapda was getting gas from Mari, Sara and Kandhkot fields. Only Kandhkot belonged to the PPL and if it disconnected supplies form Kandhkot, Wapda would meet that shortfall through switching over to furnace oil, he said, adding that it would increase the generation cost.

The PPL official, requesting anonymity, said the PPL had been raising the issue of non-payment with the federal government and had been allowed to go ahead with the gas supply agreement, which entailed disconnection in case of non-payment.

The cash-starved Wapda has already been under financial difficulties and a raise of 40 paisa per unit, approved by the National Electric Power Regulatory Authority, has been held in abeyance by the president with the directive to review and reduce the increase level by an average 20 paisa per unit.

The maximum reliance on fuel oil-based power generation despite having a substantial natural gas mix has increased Wapda’s fuel bill from around Rs1.5 billion to Rs3 billion in the previous fiscal year.

Petroleum Secretary M. Abdullah Yousaf has been talking to Wapda and urging them to make payments and there has been no effective implementation of the decision on the payment of the old arrears.

Except a nominal quantity to Sui Southern Gas Company (SSGC) for the Kandhkot town, gas from Kandhkot field is supplied to the Wapda’s Guddu station. The government is already under pressure from the donor agencies to empower oil and gas companies under the law to discontinue supplies to power utilities, which fail to make payments in time.

The World Bank pressed for the powers in view of a continuous inter-corporate circular debt in the petroleum sector that kept balance sheets of various oil and gas companies in the red for over a decade now.