ISLAMABAD: In the absence of a government guarantee, the Sui Southern Gas Company (SSGC) did not fully restore supply to Pakistan Steel Mills (PSM) even on Monday despite a payment mechanism finalised between the two entities for clearance of Rs35 billion gas dues.

On Friday last, a meeting presided over by Petroleum Minister Shahid Khaqan Abbasi, had reportedly decided that the PSM will issue post-dated cheques to SSGC to get the supplies restored.

However, a follow-up meeting of the chief financial officers of the two entities on Monday for exchange of cheques and orders for restoration of gas could not resolve the matter.

“We have not received any payment from Pakistan Steel today,” was a brief response from a SSGC spokesman.

Informed sources said the PSM on Monday handed a letter from the PSM chief executive officer Maj-Gen (retd) Zaheer Ahmed Khan to pledge one of its accounts which was not acceptable to SSGC. It wanted clearance of Rs35 billion backlog, the sources said.

The minister had “directed SSGC to restore the gas pressure of PSM while PSM should guarantee payment of the current month bill by assignment of its account,” wrote Gen Khan.

He said that the PSM was ready to assign its Allied Bank account up to the extent of payment of SSGC bill for August 2015 and onwards as per direction of the minister and ensure future payments on 20th of each month.

According to PSM, it has suffered “immense loss” as its production activity came to a halt. Bringing the machinery to ‘heat mode’ for about 75 days is a world record. Ironically, one of the coke oven batteries and the blast furnace of gas plant are also on heat mode since November 2010 and June 2010, respectively, which are two other international records.

“Molten metal in mixer at steel converting plant has already frozen due to gas problem and a loss of Rs4 billion has occurred while the mixer had also gone out of service,” wrote the PSM, adding the company had been encountering great difficulty in keeping other most essential plants, like blast furnace, kiln and coke oven by-products, alive.

Informed sources said that PSM’s monthly gas bill amounted to Rs170 million, but it was also served with late payment surcharge of Rs740 million. Its 3,400 tonnes of inventory produced at a cost of Rs9 billion has no buyers in the market in view of dumped foreign quantities and shying away of dealers amid investigations by the National Accountability Bureau and the Federal Investigation Agency.

Published in Dawn, August 25th, 2015

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