KARACHI: The Sui Southern Gas Company (SSGC) has not disconnected gas supply of the K-Electric even after non-payment of the gas utility’s monthly bills since May 2022, a statement said.
The gas utility has clarified news items that appeared in various sections of the media.
It must be clarified that the existing Gas Sales Agreement (GSA) with the K-Electric is for 10mmcfd gas only, signed back in 1978. The SSGC is not obligated to supply gas to the K-Electric beyond its contractual obligations, the company said.
The SSGC is a gas utility company which operates in a highly regulated environment. The company prioritises distribution of gas as per the government’s Natural Gas Allocation and Management Policy with domestic and commercial consumers on top of the priority list.
It is important to note that there has been a 27 per cent decline in the availability of indigenous gas during the last three years as against an ongoing annual growth in domestic customer base.
The gas utility noted that since 2012, gas was being supplied to K-Electric as per the orders of the Sindh High Court on Best Endeavour basis. Due to depletion of indigenous gas reserves, the SSGC started supplying a blend of indigenous gas and regasified liquefied natural gas (RLNG) as per the Cabinet Committee on Energy’s (CCoE) decision on April 23, 2018.
K-Electric with intentions to overcome its default on payments, filed contempt petition against the SSGC for not supplying gas to it without disclosure of all the facts that lead to reduction of gas by the gas utility to K-Electric.
The SSGC submitted a reply to contempt petition before Sindh High Court on the ground that K-Electric is a defaulter of the SSGC amounting to Rs153.02 billion in respect of indigenous gas bills, and Rs24.54 billion of RLNG bills up to August 31, 2022.
The K-Electric submitted its rejoinder to SSGC’s response and the Court granted adjournment for two weeks.
SSGC via letters dated November 12, 2021, March 28, 2022, April 4, 2022 and April 29, 2022 had informed K-Electric that the indigenous gas reserves and supplies are being depleted at the annual rate of 9 per cent to 10 per cent.
There is an annual growth of 10 per cent to 12 per cent in the domestic sector, therefore SSGC is constrained to reduce indigenous gas supplies to K-Electric.
The K-Electric has not signed the GSA as per the quantum of gas being supplied to it, but as per the CCOE directives of April 2018.
It is alarming to note that RLNG is an imported gas and any default ultimately leads to interruption of the LNG supply chain and sovereign default, undermining the reputation of the country.
