Pakistan: Holding Karachi’s Citizens Hostage

Better sense must prevail and the power supply to Karachi city must be restored. Companies in the public domain must ethically never be allowed to use “dues and receivables” as an excuse to hamper the provision of essential services and utilities to the citizens.

Posted on 04/17/18
By Ikram Sehgal | Via ViewsWeek
The Karachi Electric and the gas utility stalemate has resulted in a power shortfall of around 500MW, causing huge difficulties to the citizens in high temperatures.

With the supply of gas from Sui Southern Gas Company Limited (SSGC) to the metropolis’ power utility, K-Electric (KE) far below that is required to run the KE’s gas-fired power plants, consumers across Karachi city are suffering from additional load-shedding. The SSGC and KE stalemate have resulted in a power shortfall of around 500MW which started 10 days ago and continues without any sign of a solution.


SSGC initially denied that there had been any reduction in the gas supply to KE. Reports were then circulated that facing a shortage of gas supply from different fields SSGC was unable to meet the demands of existing customers. In reality, SSGC has a different problem with KE, claiming that KE was not making payments for the gas being supplied. On the other hand, KE gave proof of making regular payments of its monthly gas bills, the capital amount being payable was not in dispute, the interest amounting of Rs 60bn was.  In a letter to the Commissioner Karachi, SSGC made a conditional offer to increase the gas supply if KE agreed (1) to settle its arr­ears (2) sign a Gas Supply Agreement (GSA) and (3) pay a security deposit. For its part KE claimed that the amount payable to SSGC was only Rs 13.7bn whereas the rest of the amount was disputed, Rs 60bn arrears as interest and late payment surcharge both sub-judice without KE’s having the requisite gas to run its gas-based power stations, the shortfall of about 500MW will continue. 


Unfortunately for the citizens of Karachi, SSGC has chosen the hot weather crisis to push through its own selfish agenda with KE.  Possibly Shanghai Electric Power (SEP) proposed taking over KE was another consideration. No thought was given as to the ramifications of load shed for the city’s industrial capacity causing losses amounting to billions, obviously, the resulting unemployment does not concern SSGC.  Karachi Chamber of Commerce and Industry (KCCI), Bin Qasim Association of Trade and Industry (BQATI), etc have raised the alarm. Industry analysts suggest the revisiting of the “Gas Load Management Policy” by working out a solution to allocate gas supply from least priority sectors such as CNG sector to Power sector which comes second on the priority list.


Committed to resolving this ongoing row so that the people of the city do not continue suffering because of the sweltering weather, Sindh Chief Minister Murad Ali Shah summoned officials from both KE and SSGC over the weekend, categorically stating that he would not allow them to punish the people of the city due to their disputes. In a bold and welcome move, CM Murad not only gave both sides an ultimatum to find a solution but also sought immediate intervention of PM Khaqan Abbasi to resolve issues between SSGC and KE to provide some relief to citizens and businesses in Karachi.  A second letter from the CM to the PM within 10 days highlighted the urgency of providing relief to the city’s people from load-shedding.


According to the CM, SSGC has offered “in the public interest” to increase the volume of gas supply to the KE through the gas management plan, provided the electric supply company pays a security deposit, resolves outstanding payment issue and signs a GSA (gas supply agreement). KE, on the other hand, has committed to providing a security deposit and showed readiness to sign the GSA on mutually agreed terms. In an emergency board meeting on Sunday, the SSGC reportedly approved supply of 120mmcfd (million cubic feet per day) gas to the KE upon furnishing Rs6 billion security deposit, equivalent to a three-month average bill of 150mmcfd gas supply and signing of mutually agreed terms of reference for the appointment of an independent chartered accountant firm. On its part, KE maintains that payment of markup/late payment surcharge to the SSGC is a complex matter and in turn, involves the recovery of outstanding electricity dues from the Federal Government (tariff differential subsidy) and other strategic bulk consumers. According to the CM’s letter, a Committee has been recommended to be constituted comprising representatives of the Federal and Provincial governments, SSGC and KE to sort out the outstanding issues.


SSGC refusing to increase the gas supply to KE given the rising power generation requirements over the matter of dues sets an alarming and dangerous precedent – having a graver implication that is simply not acceptable. This mode of recovering among public sector/semi-public sector entities has not only many ramifications but complications in the future for both all stakeholders involved and the public at large.  This precedent might see PSO cutting the fuel supply of PIA on account of PKR 26 billion dues or ceasing supplies to Sui Northern Gas Pipelines (SNGPL), the main supplier of re-gasified liquefied natural gas in the country which owes PSO at least Rs 28 billion or allow KE to disconnect the power supply of KWSB due to PKR 32 billion dues going forward. For its part SSGC owes PPL and OGDCL amounts to the tune of PKR 112 Billion. Should these companies also curb gas supplies to SSGC, we will then have a city (and a country) without gas, power, and water.  Does the management of SSGC want to hold Karachi’s citizens to ransom?


Who can forget the many deaths in Karachi and Sindh due to heatstroke in the past two years? Silence or indifference on the subject by the country’s leadership consisting political representatives, government and administration will exacerbate the sufferings of the citizens who are already in misery the economic activity which is being disrupted has its own cyclical impact.  Limited production by industrial units of Karachi will affect the overall economic performance of the country by further plunging the exports and trimming supplies in the local markets, this will raise the levels of poverty and unemployment.


Better sense must prevail and the power supply to Karachi city must be restored. Companies in the public domain must ethically never be allowed to use “dues and receivables” as an excuse to hamper the provision of essential services and utilities to the citizens. At the moment SSGC is holding the citizens of Karachi hostage to pursue its own selfish objectives. When militants of the MQM were holding Karachi to ransom, those in power to do something did nothing, where have they suddenly acquired the courage to blackmail Karachi citizens? To drag us back to the dark 2000-2010 years for old times’ sake?  For humanitarian considerations if nothing else, some gas supply must be restored immediately while an empowered Committee must resolve this dispute without further delay.

The writer is a defense and security analyst.

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