Despite repeated promises and claims, Karachi Electric Supply Company (KESC) has not made any outstanding payment to Sui Southern Gas Company (SSGC) since August 2011, with the result that its receivables have ballooned to Rs 32 billion, as of November 17, 2011. This alarming situation is forcing SSGC to substantially curtail gas supplies to KESC, a press release issued here on Thursday said.
"Till now even without any Gas Sales Agreement (GSA) with KESC, SSGC has not cut off gas supplies to the former only because it does not want Karachi to suffer prolonged power outages", it added. In fact, in the month of Ramadan this year, the gas utility increased supply to 200mmcfd.
It must be mentioned here that SSGC purchases gas from local and foreign E&P companies. These purchases are governed through Gas Sales and Purchase Agreements (GSPAs). KESC's failure to settle its dues with SSGC has put the latter in severe liquidity crisis. On the other hand, SSGC has continued to make efforts at negotiating and finalising a GSA with KESC but in vain primarily due to KESC's inflexibility. KESC is also unwilling to provide SSGC with bank guarantee, also referred to as Gas Security Deposit that would have provided security to SSGC in case of default.-PR