Do not punish people of Karachi, Murad asks KE, SSGC

F.P. Report

KARACHI: Sindh Chief Minister Syed Murad Ali Shah presiding over a joint meeting of K-Electric (KE) and Sui Southern Gas Company Limited (SSGCL) here at the CM Hose on Saturday has categorically told both the entities that due to their personal disputes he would not allow them to punish the people of this city.

The meeting was attended by SSGC Chairman Board of Directors Lt. Gen. Javed Zia (R), Board of Directors Agha Sher Shah, Rizwan Kehar, MD SSGC Amin Rajput, Sr GM Saeed Larik, CFO Fasihuddin Fawad. The KE was represented by its Chairman Waqar Siddiqui, CEO Tayyab Tareen, Board of Directors Zubair Motiwala, Khalid Rafi, Mubasher Shaikh, Freeric Sicre, Chief Generation Officer Mr Dale Sinkle, Chief financial Officers Moonis A. Alvi, and Directors Aamir Qureshi. The chief minister was assisted by his Principal Secretary Sohail Rajput and Secretary Energy Agha Wasif.

The chief minister said that Karachi is currently facing increased electricity load shedding. The KE blames SSGCL for reduced gas supply, resulting in the decreased generation of electricity. The SSGCL denies and claims that 90 mmcfd is being supplies against the old agreement of 10 mmcfd signed in 1970s.

He said that in the claims and counter claims between the two organizations people of this city suffer a lot in this sweltering weather. Therefore, he had written a letter to the prime minister and took this issue with him.

It was pointed out in the meeting that SSGCL provides gas to KE without any gas supply agreement (GSA) for production of electricity from gas-based power generation plants. The SSGCL follows the ECC decisions for supply of gas. It was also noted that from 2001 to 2008, the ECC allocated supply of up to 276 mmcfd gas to KE for its multiple gas-based power plants.

The KE has four gas-based power plants which require 180 mmcfd to generate 1104 MW electricity.  Additionally, KE requires 10 mmcfd, as pilot fuel, to operate duel fuel gas/furnace oil-based plant at Bin Qasim Power station.

It was also told in the meeting that minimum 190 mmcfd gas is required in summer for operating single fuel gas-based plants at full load. The SSGCL has significantly curtailed gas supply to KE and the current supply is 90 mmcfd. The average for 2017 was 141 mmcfd versus 177 and 167 in 2015 and 2016 respectively.

The chief minister was told that there was KE-SSCGL billing dispute. The KE-SSGC bills payment issue first surfaced in 2010 when KE defaulted on payment of cumulative bill of arrears of Rs10 billion. Since, SSGCL has been charging mark up at the arte of 15.5 percent on the arrears.

The two entities signed a payment plan in 2014. As per their agreement plans, the KE was obligated to pay arrears in addition to current billing, if agreed benchmark gas supply is met. According to KE outstanding balance towards SSGC is Rs13,7 billion while SSGC says the receivable are Rs80 billion. The KE’s average monthly bill is Rs1.5 to Rs2.5 billion which is regularly being paid besides, part of the outstanding `principal’ amount is also paid.

The chair was also told that KE contests SSGCL markup claim and considers it as an outcome of circular debt. Moreover, markup is not charged on other entities like KWSB etc. Now the matter is pending in the Sindh High Court. The chief minister talking about summer situation said that said the peak demand is expected to be around 3,400 MWs, shortfall at peak summer time would be 400 MW provided all plants of KE are running at their full capacity. He added that KE requires at least 190 mmcfd supply of gas as in previous years to run its single fuel gas plants to ensure smooth supply of power to domestic and industrial consumers. “The reduction of 20 mmcfd creates additional gap of 100 MWs which would result in significant load shed for consumers, including industrial consumers.

Murad Ali Shah said concluded that with the gas supply at the current level of 90 mmcfd the power shortfall would further increase by 500 MW in addition to the exiting 400 MWs in peak summer. “This means the people of this city, including the industrial units would have to face more than 10 hour load shedding,” he said and added this was unacceptable.

He urged both the entities to sit together from Monday and by Wednesday iron out all their differences whether they would have to sign the new agreements and payment plans but on Thursday he wants a solution to the problem. “The people of city cannot be punished further,” he said categorically.