This is apropos to the news item appeared in ‘Daily Times’ under the heading ‘KE receivables surge to Rs.158.8 Bn’.
The Sui Southern Gas Company (SSGC) issued a statement stating that the actual outstanding amounts KE owes to SSGC, ‘a Public Sector Gas Utility Company’ supplying gas to KE to meet energy needs of Karachi despite the fact that KE is one of the major defaulters of SSGC; the outstanding as of 31 March 2019 is Rs. 92 Billion (out of which Rs. 62 billion is Late Payment Surcharge). Out of 2.8 million customers, KE is the only customer in SSGC franchise area where no GSA exist with SSGC except for 10 MMCFD gas despite the fact that SSGC is supplying 180 MMCFD gas to KE.
Prior to the privatization of KE in 2005, the amount outstanding was Rs. 1 billion only. Main reason for accumulation of the overdue amounts is KE’s departure from agreed arrangements, non recognition of LPS unilaterally. KE was recognizing and or paying LPS till June 2009. The reason behind KE’s regular payments effective 2012 (equivalent to current billing) is the restraining orders by the Honorable High Court of Sindh (SHC). It is misstatement of the facts that the matter of outstanding LPS is subjudice rather it is whole amount outstanding is under litigation. Besides above, the Honorable SHC has passed restraining orders against disposal of KE’s immovable properties.
It is pertinent to mention here that KE is not only disputing the legitimate Receivables of SSGC but evading this fact by claiming the right to set off SSGC liabilities against third parties. This is evident from their published financial statements.
In the larger interest of the people of Karachi, SSGC as a responsible corporate entity has made concerted efforts on all forums to settle the disputes. Cabinet Committee on Energy (CCOE) in April 2018 took cognizance of the facts and decided to engage a third party chartered accountant firm of international repute to reconcile the outstanding dues between the two utilities. Despite the fact that SSGC has sent the duly agreed (in April 2018) / signed Terms of Reference (TOR) for engagement of the CA firm to KE, KE is still avoiding to initiate the exercise.
It is regretfully stated that KE’s efforts not to recognize the outstanding in its Books of Accounts and disputing the payments is an attempt to gain unlawful profits at the cost of national exchequer and misleading the stakeholders. KE’s default on payments to SSGC has adversely affected SSGC’s ability to discharge its financial obligations towards gas producers having agreements under sovereign guarantee.