KARACHI: Liquidity crunch facing the Sui Southern Gas Company (SSGC) is seriously thwarting the gas utility’s plan to expand its pipeline networks and finance other projects, its spokesperson said.
“The growing receivables have made it increasingly difficult for the company to make payments to the local and foreign E&P (exploration and production) companies to buy gas as well as to meet other commitments,” said the spokesperson.
He said the receivables owed by the Pakistan Steel Mills (PSM) have been continuously rising for the last three to four years.
PSM owed Rs8.3 billion to SSGC for the gas supply to the mills in July 2012. The outstanding was Rs15 billion in July 2013. It jumped to Rs24 billion in July 2014. And, presently it amounts to the staggering Rs35 billion.
“PSM has not paid any amount to us since April 2015, and if this grave situation persists the gas utility may be forced to default on [its] payments [to others],” said the spokesperson.
He informed The News that SSGC had been reminding the PSM management of the mounting bills through the oral and written notices for the last few years.
However, it didn’t stop supplying gas, he said.
The spokesperson said the sad part was that PSM had blamed the ministry of petroleum and natural resources and SSGC’s chairman for its production halt instead of making any firm commitment to settle its dues.
Earlier, PSM alleged that it was unable to pay salaries to its staff due to the cuts in gas supplies.
The SSGC’s official, however, said PSM has Rs9.0 billion worth of inventory.
“The fact of the matter is that it has enough avenues to generate funds… it can sell the inventory,” he said.
“Its [PSM] own products have been less attractive due to a huge dumping of imported products.”
He further said if PSM continues to default on its payments this will affect financial health of SSGC and cause derailment of its capital expenditure projects, “which are obviously of strategic nature”.