KARACHI: The issue of circular debt between Karachi Electricity Supply Company and the Sui Southern Gas Company remains unresolved as the two utilities have not been able to thrash out the payment schedule, causing anxiety to the SSGC as it sees hard times if the KESC did not clear its bills.
According to the SSGC, the power utility owes it Rs28 billion, in addition to the current month`s bill. The SSGC`s board of directors has asked the management to curtail or snap gas supply to the KESC if it remained adamant on not making payments for the gas supplied for power generation.
Sources say the SSGC has serious reservations on the KESC`s proposals that were sent by its CEO to the SSGC managing director after the July 29 meeting at the Governor House.
The seven-point proposal was based on the discussions held at the Governor House and subsequent deliberations. The KESC had submitted a revised payment plan on the minimum supply of 200 mmcfd.
Sources said the KESC had offered to pay 50 per cent balance of May 2011 by Aug 5, and the gas bill of June by Aug 27. The KESC had also offered to clear the July bill on Sept 27, the bill for August on Oct 27 and the November bill by Dec 31.
The SSGC has serious reservations on the KESC`s proposal and has instead suggested an early meeting to work out an alternative schedule.
The SSGC, according to sources, is of the view that the KESC should make payment to the gas company directly for the product it has purchased.
On July 29 the Federal Minister for Petroleum and Natural Resources Asim Hussain had brokered a formula for enabling the KESC to reduce loadshedding and had directed the PSO and the SSGC to continue the required fuel supply to KESC.
The bone of contention between the power utility and the gas company is the implementation of a recent decision of the Economic Coordination Committee of the cabinet to supply the allocated quota of 276mmcfd to the KESC. KESC has insisted on the implementation of this decision. But the SSGC has maintained that ECC`s allocations were subject to signing of a gas supply agreement (GSA) which the power utility was evading.