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Karachi Electric Supply Company Limited rejects unilateral decrease in gas supply by Sui Southern Gas Company

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by September 20, 2011 Miscellaneous

Karachi: Karachi Electric Supply Company has appealed to the Federal Minister for Petroleum and Natural Resources, Dr. Asim Hussain to intervene and avert the looming power crisis in the city.

Moreover requesting that the government ensures the implementation of the Economic Coordination Committee (ECC) decision, which on June 30 of the current year directed SSGC to divert and prioritize supply of natural gas to the public power utility company, by curtailing supply to private factories and to deliver the approved quota of 276 MMCFD of gas, in order to save the metropolitan city from spells of extended load shedding brought about by the misallocation of resources in the energy sector.

While rejecting SSGC’s unilateral decision to further reduce gas supply to KESC, the utility said that SSGC, is in direct violation of the Federal Cabinet decision of June 30. Being a strategic partner, instead of finding a way out of the crisis, SSGC not only refused to increase gas supply to KESC but on the contrary made indications to decrease the supply, even further below the previously curtailed level of 180 MMCFD.

An important point to be noted is, that the SSGC was still supplying 300 MMCFD to private factories much against the dwindling supply to the public power utility in the band of 170 MMCFD. This is infact a clear indication of warped priorities and misallocation of resources.

KESC said, that in case SSGC continued with its allocation policies detrimental to the public needs, then keeping in perspective the fuel crunch, from Monday onwards the duration of load shedding could possibly shoot up to 10 hours while industrial and strategic areas may also see load shedding. This schedule would then continue till gas or oil in lieu of the gas shortfall at gas price was supplied.

The Government had in 2009 committed to provide 276 MMCFD to KESC’s existing power plants and 130 MMCFD extra for the upcoming 560-MW Bin Qasim Power Station-II. However, SSGC continued to violate the commitment. The Sindh High Court ordered SSGC twice to supply 276 MMCFD to KESC but despite being a Government organization itself, SSGC has yet to honour that verdict either for the benefit of the masses.

On June 30 this year, ECC approved to exercise a 2-day per week gas holiday for CNG stations and 20% supply curtailment to industries under the ‘Uniform Natural Gas Load Management Policy’ and divert the saved resources to the power sector. Yet, SSGC continued to violate the ECC decision. KESC, in line with its commitments made in the series of meetings at the Governor House, has already paid well over Rs. 13.5 Billion to SSGC and PSO for settlements against fuel purchase.

More so, KESC also offered SSGC that for every additional molecule of gas supplied to it, over 200 MMCFD, the utility would pay SSGC twice the unit cost, on a Daily Cash, plus on a monthly billing basis, which would also go towards clearing of existing dues, but SSGC has so far ignored this welcoming gesture and responded in silence.

KESC further said that SSGC, being a public sector institution, had not only been ignoring government orders and directives but was rather misleading public by mentioning the outstanding amount as an excuse while most of the amount had to be paid by Ministry of Finance in lieu of KESC receivables from KWSB, CDGK, etc. That was the circular debt issue and beyond SSGC’s mandate to resolve in isolation.

KESC said that fuel supply issue had become a chronic problem and Government needed to settle this once and for all without further delay to end the ad-hocism that KESC was subjected to. Stable supply of the right fuel mix is a must if load shedding is to be kept at a minimal level in residential and commercial areas and exemption for industry and strategic installation was to continue, plus is equally important if the tariff was to be kept at an affordable level.

The government is fully aware of these facts and it must consider all the factors and understand the seriousness of the issue and take decisive steps to increase gas supply to KESC to avoid the impending power crisis.

For more information, contact:
Adil Murtaza
Assistant Manager, Media and PR
Karachi Electric Supply Company Limited (KESC)
2nd Floor, State Life Building No 11, Abdullah Haroon Road, Saddar, Karachi
Tel: +9221 9920 7163
Cell: +92346 822 3641
Email: adil.murtaza@kesc.com.pk

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