ISLAMABAD: The Ministry of Industries and Production (MoI&P) has sought Rs 0.410 billion immediately for making payment of five months bill to SSGCL, sources close to Secretary Industries told Business Recorder.

Pakistan Steel Mills (PSM) has a dedicated gas allocation of 41 MMCFD from SSGC to the manufacturing operations of the PSM's plant. Since the closure of the production activity in PSM, low flame gas of 2 MMCFD is being supplied to PSM primarily to preserve the coke oven batteries' and refectory kilns with the average monthly bill of Rs 82 million.

The sources said, PSM has re-commissioned two coke oven batteries in 2008 with the Rs. 4215.40 million. Considering the existing exchange rate of 165.70, the present cost of the Coke Oven Batteries comes to Rs 4.215 billion. Industries and Production Division requested for the allocation of Rs. 47.589 billion to cater to the requirements of PSM under different heads during the CFY: 2020-21. This included Rs.1.2 billion for the SSGC's in lieu of supply of gas during CFY:2020-21. Privatisation Commission has not offered any comments on the proposal.

The sources said, the budgetary allocation of Rs.16 billion for PSM was made as against the demand of Rs.47.589 billion. Out of the available budget, the Federal Government has released Rs. 11.441 billion to the retired employees of PSM (litigants) under the Court orders. Likewise, ECC of the Cabinet has also approved the net salaries of PSM's employees amounting to Rs.3.850 billion, leaving Rs.700 million (approx) as balance amount.

Presently, PSM is on the active list of Privatization Commission. The retention or disconnection of gas supply of 2 MMCFD to plant is a policy decision which shall be made in consultation with Privatization Commission and Board of Investment (Bol). The outcome of the consultation shall be brought before the ECC of the cabinet in due course of time. After ECC's approval of Rs. 350 million in January, 2020, PSM started making payment to SSGC that continues till May 2020.

Due to lack of funds PSM could not be able to pay the gas bill liability after releasing partial payment of June, 2020. As per record, PSM has to pay Rs. 22.242 billion (approx.) as a principal amount on account of outstanding gas bill payment to SSGC till June, 2020. The likely expenditure to be incurred amount during the period July 2020- June will be Rs.0.984 billion (Rs.82 million (approx) per month).

The MoI&P does not have sufficient resources to pay the entire liability of SSGC. Therefore, it may be deferred till the time privatisation process of the PSM will be completed. Meanwhile, the ECC has been requested to approve an amount of Rs 0.984 billion trough technical supplementary grant with direction to Finance Division for releasing an amount of Rs 0.410 billion ( limp sum) immediately for making payment of five months i.e. July -November 2020 to SSGC.

Copyright Business Recorder, 2020