CM Murad urges KE, SSGC not to punish people of Karachi

KARACHI: Sindh Chief Minister Syed Murad Ali Shah on Saturday told K-Electric (KE) and Sui Southern Gas Company Limited (SSGCL) that due to their personal disputes he would not allow them to punish the people of Karachi. He asked both the entities to resolve their issues by coming Thursday.

He said this presiding over a joint meeting of KE and SSGC here at the CM Hose.

Chairman Board of Directors SSGC Lt Gen (R) Javed Zia, members Board of Directors SSGC Agha Sher Shah, Rizwan Kehar, Managing Director SSGC Amin Rajput, Senior General Manger Saeed Larik, Chief Financial Officer SSGC Fasihuddin Fawad. Chairman KE Waqar Siddiqui, CEO KE Tayyab Tareen, members Board of Directors KE Zubair Motiwala, Khalid Rafi, Mubasher Shaikh, Freeric Sicre, Chief Generation Officer KE Dale Sinkle, Chief Financial Officer KE Moonis A Alvi, and Director KE Aamir Qureshi were also present on this occasion.

The chief minister was assisted by his principal secretary Sohail Rajput and secretary energy Agha Wasif.

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The CM said that Karachi was currently facing extra electricity load shedding. The KE blamed SSGCL for reduced gas supply, resulting in the decreased generation of electricity, he said adding that on the other side SSGCL claimed that 90 mmcfd was being supplied 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 the megalopolis suffered a lot in the sweltering weather. Therefore, he had written a letter to the prime minister and took this issue with him, he added.

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 Economic Coordination Committee (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, said a press release issued by the CM House.

CM Murad 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 rate 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, said the release.

The chief minister 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 Karachi Water and Sewerage Board etc. Now the matter is pending in the Sindh High Court.

Murrad Ali Shah talking about summer situation said that the peak demand was expected to be around 3,400 MWs, shortfall at peak summer time would be 400 MW provided all plants of KE were running at their full capacity.

He added that KE required 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,” he said.

He said 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 “this is 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 wanted a solution to the problem. “The people of city cannot be punished further,” he said categorically.

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