Pakistan Petroleum Limited (PPL) has served gas disconnection notice on Pakistan Electric Power Company (Pepco) for not paying gas bills for four months ie March to June 2008, official sources told Business Recorder, here on Tuesday.
"Since August 31 will be falling on Sunday, we are pleased to extend the disconnection notice to September 3," said Khalid Rehman in a letter to the Secretary Finance. This correspondent telephoned Rehman but his assistant did not put the call through.
On August 22, PPL wrote a letter to Pepco and asked for immediate payment of overdues amounting to Rs 2.479 billion comprising gas bills for March to June 2008 and late payment surcharge amounting to Rs 2.483 billion as applicable under the Natural Gas (Development Surcharge) Ordinance, 1967.
"We had further advised that in case Pepco fails to settle overdues by August 31, PPL will be constrained to take drastic measures which may include disconnection of gas supplies to Pepco from Kandhkot Gas Field," the sources quoted the Managing Director of PPL as saying.
Meanwhile, the Managing Director of Pepco is reportedly of the view that the government is not allowing increase in tariff due to which Pepco deficit was rising with each passing day. "OMCs have declined to meet the furnace oil demand of Gencos'' power stations because of non-payment of their outstanding dues by Pepco which have accumulated to alarming levels - more than Rs 15 billion," said Fazal Ahmad Khan, Managing Director, Pepco.
According to Pepco, total generation capacity of Genco-III power stations comprising Thermal Power Station, Muzaffargarh, Faisalabad and Multan is about 1500 MW. Against total gas demand of 315 mmcfd, M/s SNGPL reduced it to 203 mmcfd in 2004-05 which was further slashed to 41 mmcfd in 2007-08. Till last week Hubco owed PSO Rs 18 billion, Pepco Rs 11 billion and PIA Rs 3 billion.
The sources said that PSO was also facing hardships in opening of Letter of Credit for import of furnace oil because of the failure of Hubco, Pepco and PIA to pay their outstanding dues. The federal government is also one of the defaulters of PSO.
"Federal government has to pay Rs 36 billion of PSO as Price Differential Claims (PDC), which have created a liquidity crunch for the state-owned oil supplier," said another official on condition of anonymity. The sources said it was very hard for a company to operate with Rs 68-69 billion cash shortfall and PSO was trying to deal with this extraordinary situation.
The sources said Pepco has to pay Rs 175 billion to IPPs of which Rs 105 billion are outstanding whereas Rs 70 billion are overdue. Pepco has already communicated to the federal government that IPPs have threatened to call GoP guarantee and if this happens it would have disastrous for the national economy and Pakistan''s credit ratings, the sources added.