KARACHI: The Sindh High Court has restrained the Sui Southern Gas Company (SSGC) from encashing two bank guarantees of the K-Electric amounting to Rs6 billion issued for indigenous supply of gas.
A single bench headed by Justice Syed Hasan Azhar Rizvi also issued notices to the SSGC, two private banks and the deputy attorney general for a date to be fixed after summer vacations.
The KE, through its counsel, filed a lawsuit in SHC stating that it was consuming natural/indigenous gas, RLNG, furnace oil and high-speed diesel for generating electricity.
It said natural gas and RLNG were being provided to the plaintiff by the SSGC.
The lawyer for plaintiff, Arshad Tayebaly, argued that the SSGC had asked the power utility to issue a bank guarantee equivalent to three months estimated indigenous gas supply and thus two banks guarantees of Rs4bn and Rs2bn were issued in favour of gas utility in 2018 and the period of such guarantees was extended from time to time.
However, he stated that such bank guarantees was like a security deposit and the SSGC could not encash the same against arrears and any other dues.
The counsel further submitted that the power utility had made all payments of monthly gad bills and the bill for the month of May amounting to Rs246.575 million was also paid.
He claimed that SSGC had never demanded any outstanding amount in respect of any default in payment of gas supply, but the plaintiff had received information from two private banks that the SSGC had approached them for encashment of the both guarantees.
He maintained that the SSGC was allegedly seeking encashment of guarantees on the pretext that the KE owed outstanding dues of the gas utility amounting to around Rs15bn on account of weekly bills for RLNG and not monthly bills of gas.
The lawyer further submitted that if the bank guarantees were encashed by the SSGC, it would not only be a violation of the term of the bank guarantees but the plaintiff would also be subjected to a significant liquidity crunch.
Published in Dawn, July 10th, 2022
