Pakistan Steel Mills Corporation (PSMC) has sought assistance of the ministry of production to get its electricity supply reinstated. The state-run steel producer says it faced Rs 240 million production losses during two days.
Sources told Business Recorder on Wednesday that the management of PSMC has decided to approach the ministry to get power supply restored, after it was cut off by Karachi Electric Supply Company (KESC) Tuesday after the country's largest steel plant failed to pay power bill.
KESC sent electricity bill worth Rs 210 million on March 14, 2012 to Pakistan Steel with due date of March 20, 2012, however the PSMC management failed to pay the bill till March 27 and after sending a notice of disconnection, KESC cut off the power to the state owned steel producer.
Wasif Mehmood, acting Chief Executive Officer of PSMC has sent a letter to Gul Muhammad Rind, secretary ministry of production requesting him to intervene in the matter. The acting CEO has also claimed in the letter that KESC has breached the agreement with it and according to the agreement payment will be settled in 60 days.
On Tuesday, after disconnection of power supply, PSMC claimed to take action against KESE, however despite facing a loss of Rs 120 million per day, Pakistan Steel did not take any legal action against KESC till Wednesday night. Sources said that electricity was not restored till filing of this report and operation of cold rolling mill and hot strip mill remained suspended.
PSMC has recently hired a chief law officer on Rs 0.5 million in advance payment for legal cases; however the management failed to take any legal action due to unknown reasons, they added. A legal notice was sent to KESC before electricity cut off and after the KESC action, no legal action has been taken by the management, they said.
Sources said that KESC bill was for Rs 210 million, while due to disconnection, PSMC faced over Rs 240 million operational losses in two days, which will raise losses of the mill, which is already facing severer financial crisis due to shortage of raw material and low capacity production.
"We don't seek any special favour from KESC....we just want to get our power supply restored, as all the dues till January stand cleared," said a high official of PSMC. A spokesman of Pakistan Steel has strongly condemned the KESC act terming it a deliberate act to damage the exchequer by the KESC officials.
KESC and PSMC had signed mutual business relation agreement in 1982. According to the accord both will provide services to each other. KESC will provide electricity while PSM will charge right of way charges, water and gas supply charges to KESC stations, according to clause- 6(c) of the agreement, he claimed.
"KESC and Pakistan Steel will submit their respective bills to each other for payment, by the end of the following month, while 30 days time will be given for the payment after submission of the bill. In case, the bill is not paid in 60 days of the date of submission, interest will be charged," he added.
According to PSMC, it is clearly mentioned in the agreement that in case of non-payment, there will be no disconnection of services. But, KESC disconnected the electric supply of PSM during negotiations for payment of the bill. The KESC action has directly affected the production units and thickly populated residential areas of Steel Town and Gulshan-e-Hadeed.
KESC still has to pay Rs 120 million to PSM as several bills have remained unpaid for several years, while on the other hand; PSM has paid all the previous bills. Officials of PSMC also admitted that the power disconnection is causing a loss of about Rs 120 million per day to Pakistan Steel, as the important production units of PSM hot strip mill and cold rolling mills remained closed and major finished products of PSM cannot be produced.
However, they said KESC is solely responsible for this illegal act and the losses to the exchequer. PSMC management is preparing to take legal action against KESC and to claim damages occurred due to disconnection of power.
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