KARACHI, Jan 12: The Karachi Electric Supply Corporation has not paid monthly bills — amounting to Rs1.51 billion — to the Sui Southern Gas Company for the past two months.
Well-placed sources told Dawn on Wednesday that the SSGC had asked the power utility to pay up the outstanding dues at the earliest. They added that the KESC had not paid the bills for October and November of the previous year.
They said the outstanding dues were too large to be ignored. Last year, they said, the KESC had purchased natural gas worth Rs5 billion from the SSGC. Similarly, the year before last the KESC had paid Rs2.59 billion for the gas it had received from the SSGC.
They added that the SSGC claimed 13 per cent of the outstanding dues as late payment surcharge but the power utility never paid it.
The sources said there was no written agreement between the KESC and the SSGC for the supply of gas from its gas fields. “Being two government organizations, both utilities try to cooperate with each other.”
High-ranking SSGC officials told Dawn that both the utilities were drawing up new contracts to formulate the gas purchase deals. “The SSGC provides natural gas to four power plants of the KESC — two at Korangi, one at SITE and one at Bin Qasim. The agreements signed in the past have become outdated. That is why heads of terms of new agreements are being formulated these days. The new agreements will enable the SSGC to be firm with the KESC in case of non-payment for a long time,” they explained.
KESC officials at the Bin Qasim power plant told Dawn that the power utility had converted five generation units to natural gas because the other alternative, furnace oil, was far more expensive than natural gas. They added that if the gas supply from the SSGC was suspended, or even decreased, the cost of production would go up enormously.
Analysts point out that in 2000 the KESC consumed fuel and oil worth Rs13.9 billion. In 2001, the KESC used fuel and oil worth Rs17.7 billion.
The SSGC officials said the new agreements would have clear-cut instructions about the maximum amount of natural gas that the SSGC could give to the KESC, the minimum amount of natural gas provided by the SSGC, the minimum amount of gas that the KESC must purchase and the quality of natural gas.
They added that by March the SSGC would be able to provide 176 million cubic feet of natural gas per day to the KESC. “The supply of natural gas to the KESC is, however, dependent on the supply from the Bhit gas field. If it comes through, the supply is guaranteed. As a matter of fact, this is also part of the heads of term being formulated these days.”
