MUSHTAQ GHUMMAN

ISLAMABAD: Federal government and K-Electric are expected to finalise a revised Power Purchase Agreement (PPA) and Gas Supply Agreement (GSA) during the second round of talks to be held on September 7, 2015 under the chairmanship of Secretary Water and Power Younas Dagha.

Well-informed sources told Business Recorder that both the National Transmission and Despatch Company (NTDC) and Sui Southern Gas Company Limited have sent drafts of PPA and GSA, respectively, to the K-Electric management for comments.

“K-Electric management will submit its comments on both the draft agreements during the meeting and after hearing their arguments the two agreements will be finalised,” the sources said.

The legal teams of SSGC, Water and Power Ministry and NTDC are in contact with the management of K-Electric. SSGC management is at present under intense pressure after the arrest of its top officials.

SSGC is supplying 10 mmcfd gas to KE under the GSA. All efforts made by SSGC to enter into a GSA with KE have failed due to various reasons. KE is currently the largest customer of SSGC and also the largest defaulter to the tune of Rs 58.333 billion as on June 30, 2015. KE began defaulting on its payment from 2008. 

Replying to a question, source said, the stakeholders have already been directed to reconcile their receivables and payables claims and bring the agreed amount to the committee wherein payment mechanism, amount and duration will be finalised. When contacted Secretary Water and Power, Younas Dagha said that substantial progress will be made on KE issues in the forthcoming meeting.

Replying to a question regarding continuation of 650 MW electricity to K-Electric from the national grid Secretary Water and Power said that a decision will be taken after deliberations with KE management. However, he indicated that supply will continue to KE “as Karachi is also part of Pakistan.”

The source said the committee in its maiden meeting on August 21, 2015 decided that KE and provincial government would pay current bills to avoid piling up circular debt which has choked the entire energy sector. Responding to a question on the future of the supply of 650 MW electricity to KE from the national pool without any agreement for the last seven months sources stated that the tones of Federal Minister for Water and Power, Khawaja Asif and Minister of State for Water and Power, Abid Sher Ali have softened subsequent to the meeting of the representative of Abraj Group with the Federal Minister.