KARACHI: In response to a letter written by K-Electric to its primary fuel supplier — the state-owned Sui Southern Gas Company (SSGC) — the latter has demanded that the matter of outstanding dues owed by the power generator must be settled before any new Gas Supply Agreement (GSA) can be signed between the two entities.

The response came via a public statement once the contents of KE’s letter, which was circulated among ministers, were reported in the media on Friday. In that letter, Karachi’s only power utility had warned that the metropolis could once again face large-scale loadshedding in the summer if firm commitments to provide gas pressure at required levels were not signed in time. In its response SSGC says the only GSA signed between SSGC and KE was for 10 mmcfd.

“Currently SSGC is providing on average 70 to 100 mmcfd gas to KE while the company has provided 270 mmcfd plus gas to the power company in summers this year due to greater demand for gas when KE failed to arrange alternate fuels for power generation (furnace oil/­diesel),” the statement said.

The main reason behind the lack of progress of signing GSA, the gas company says, was “always due to KE reluctance to abide by the Cabinet Committee on Energy (CCoE) decision of April 2018.” The statement points to two reports by the National Electric Power Regulatory Authority (Nepra) into the causes behind past episodes of excessive loadshedding in Karachi.

“SSGC is committed towards ironing out points of contentions with KE and already started negotiations on the supply agreement despite the fact that KE owes the gas utility dues amounting to Rs122 billion, a figure the latter does not agree with,” the statement says. “However, SSGC has always maintained that the long pending issue of growing over dues need to be sorted out before the company inks a fresh GSA with KE.”

The statement further claimed that both companies — SSGC and KE — have already “reached an amicable solution of the issue in pursuance of the April 2018 decision wherein the CCoE directed for the finalisation and signing of TORs for the settlement of dues between SSGC, KE and Karachi Water and Sewerage Board.”

“The ToRs were initialled by the managing directors of SSGC and KE in April 2018 and it was decided to engage an independent reputable chartered accountant firm for the purpose,” the fuel supplier says, underlining that KE remains “reluctant to counter-sign the same.”

“In fact, in June 2018, KE went to the Sindh High Court when SSGC exerted pressure on KE to execute the TORs for reconciliation.”

Published in Dawn, December 29th, 2020