ISLAMABAD: The Centre is expected to set a time frame and mechanism for settlement of huge dues to and from K-Electric, including at-source deduction of some provincial bills, to facilitate smooth functioning of two Karachi-based utilities — Sui Sothern Gas Company and KE — and ease the sufferings of Karachiites.

A senior government official said the Centre had prepared working papers for a special meeting of the Cabinet Committee on Energy (CCoE) to be presided over by Prime Minister Shahid Khaqan Abbasi on Monday (today) on the single point agenda of the prevailing power crisis in Karachi.

The crux of the working papers, said the official, was that both utilities needed cash and gas flows for streamlining in the interest of the people of Karachi irrespective of lapses and hidden objectives of some stakeholders.

The SSGC and K-Electric will be directed to finalise the terms of their agreements relating to gas supply and payments under a tight time frame. The Sindh government would also be asked to firm up a separate arrangement between KE and the Karachi Sewerage and Water Board with the facilitation of the federal government.

PM to chair cabinet panel meeting on power crisis in Karachi today

The official said the finance ministry had expressed its willingness to make arrangements for payment of KSWB bills on the condition that it would make at-source deduction against the provincial share in the federal divisible pool. The federal authorities have, on their part, concluded that the KSWB bills were responsibility of the provincial government, more so after the devolution under the 18th Amendment in the Constitution and the 2009 Nat­ional Finance Commission award.

It is against this background that the federal ministers for power, railways and water resources, prime minister’s adviser on finance Miftah Ismail, secretaries of finance, power, water, privatisation and cabinet and managing directors of the Pakistan State Oil, SSGC and KE have been called to the CCoE meeting to be held at Governor’s House in Karachi.

Through a letter, Power Minister Awais Ahmad Khan Leghari also conveyed to the Sindh chief minister that “the KWSB is the responsibility of the government of Sindh on account of the 18th Amendment, and such responsibility cannot be overridden by any contractual agreement”, and said that support, input and cooperation of the provincial government in resolving the pending disputes are, therefore, key to moving forward on a positive manner.

As things stand now, KE has Rs52 billion claims against the KSWB, while the SSGC has claims of about Rs80bn against KE, excluding Rs7bn security deposit required for increasing gas supply from contractual 10mmcfd (million cubic feet per day) to 190mmcfd.

Separately, the National Transmission and Dispatch Company (NTDC) has Rs30bn claims against KE.

An official said the Sindh government had also been told that it was simply unimaginable that it or its departments kept sitting on payables worth billions of rupees to KE. “The provincial government entities, including KWSB, are also important stakeholders who cannot shirk their responsibility of paying for electric power services being provided to them. The resolution of issues therefore also involves an element of recognition and redressal of provincial government departments default,” the power minister said.

Informed sources said the finalisation of KE-SSGC issues on supply of gas, payment of outstanding bills and signing of agreements could not be made as KE wanted to link it with payments from the KSWB and make it part of the terms of agreement between the SSGC and KE.

The SSGC declined to accept such a demand, saying it was an independent entity responsible for its dues, supplies and affairs and could not be expected to take responsibility in any manner possible for a provincial entity.

The federal government also told K-Electric that since it had been charging late payment surcharge to all its consumers both in the public and private sectors, it could not get away with its late payment surcharge to the SSGC, though numbers could be verified by chartered accounts in the light of its late payment surcharge to consumers and payable by it to the gas company.

Similar was the case with about Rs30bn payable by KE to the NTDC on account of 650MW electricity import.

It was also reported that KE’s existing plants were capable of running on alternative fuel whose cost was a pass through in consumer tariff, but it partly compromised its profit margins.

Published in Dawn, April 23rd, 2018