KEL, SSGC spat hurts consumers and industries

K – Electric and Sui Southern Gas Company Limited (SSGC) are working to enter in a Gas Sales Agreement (GSA) to fire up 550 MW Plant to reduce load shedding in Karachi. K – Electric had earlier informed consumers that, “due to inadequate supply, 500 MW gas fired plants are currently not operational creating an additional shortfall in the system.”

The two entities have been fighting over the total sum of payments due on K – Electric; in addition to that both companies have also not been able to reach a consensus on Gas Sales Agreement which is compliant to National Gas Allocation Policy. The spat between the entities has caused enormous discomfort to industrial sector who are currently facing load shedding of more than six to ten hours.

On the other hand, the consumers are also facing long hours of black outs as well as temperatures rise.

Both the companies are currently in talks to enter in an agreement for gas sales to fire up the closed 500 MW Power Plant. According to preliminary sources, K – Electric has already agreed to pay 6 billion as a security deposit upfront to the national gas supplier (SSGC).

Both the companies have also agreed to hire a third party for audit in order to settle the dispute of outstanding payments between the two entities.

Sources at Sui Gas Company say that, a copy of agreement has already been delivered to K-Electric. The supply of gas would become relatively better once the agreement is signed.

In a press release dated March 29 KEL had reported that “Current gas supply level is insufficient to meet the growing power demand”, mentioning the shortfall of gas supplies, K – Electric had earlier informed consumers that “supply level from SSGC is currently 90mmcfd as opposed to 163mmcfd in summer 2017 and 193mmcfd in summer 2016 on average”.

The release by KEL had blamed SSGC for raising sub judice issues and disputed amounts at a time of crisis in the country. However, K – Electric’s outstanding dues towards SSGC have mounted to PKR 13.7 billion, which the Shanghai owned company informs are due to a pending agreement between the two companies.