ISLAMABAD: The over Rs100 billion ($628 million) dispute between Sui Southern Gas Company (SSGC) and K-Electric Limited (KE), which is already deterring acquisition of KE by Shanghai Electric, is going to delay the commissioning of 450MW RLNG based power plant, which could force KE to run the $650 million plants on expensive diesel.

SSGC is reluctant to sign a Gas Supply Agreement (GSA) with KE for the supply of 150mmcfd to KE’s under development dual-fuel plant unless the past receivables are agreed upon since there is a over Rs100 billion difference between the perceived amount by two utility companies.

“KE has to pay SSGC Rs122 billion against gas supplies till 2012, while they admit the liability of Rs22 billion only,” SSGC official said.

“A meeting in 2018 chaired by Shahid Khaqan Abbasi agreed that KE’s liability would be established by a third party chartered accountant firm. We have already sent the Terms of Reference (ToRs) regarding the appointment of third-party auditor to KE, and they are reluctant to sign it,” official said.

“GSA would not be signed unless this is issue is resolved because SSGC is a custodian of public money”.

On the other hand K-Electric claims the principal amount payable was only Rs13.7 billion while an additional Rs102 billion were just mark-up and surcharge.

KE has outstanding receivables of Rs220 billion towards government as tariff differential claims and another Rs12 billion from federal government. Further, another Rs29 billion are receivable from Karachi Water and Supply Board (KWSB), Rs3.0 billion from Government of Baluchistan, Rs12 billion from Government of Sindh.

“KE could not pay SSGC because it didn’t receive from federal and provincial governments. Moreover, if SSGC, a state owned entity, is imposing mark-up; KE should also impose the same rate on government receivables,” a company official said.

Meanwhile, the government is reluctant to take responsibility of waiving such a huge amount of interest receivables, as the current conduct of National Accountability Bureau (NAB) is fearsome CEO of several companies including multi-nationals expressed concern over the over-cautious approach of government ministers and officers.

“They are scared and in no mood of taking any initiative fearing inquiries and investigations afterwards,” CEO of a multi-national company engaged in energy business said requesting anonymity. “What we need is a vibrant and encouraging environment because the hand-off attitude wouldn’t help.”

On the other hands regulated corporate sector can’t raise voice as they don’t want to ‘upset’ concerned ministries.

KE’s flagship 900 MW power plant, BQPS-III is progressing on fast track and the gas turbine, generator and heat recovery boiler for the first unit of 450 MW have arrived at the power utility’s Bin Qasim Power Complex.

“The first unit of K-Electric’s RLNG-based 900MW (450×2) plant would be ready and tested by April this year enabling the utility company to shut down its 210MW fuel oil based inefficient plant by the end of 2021,” Moonis Alvi CEO K-Electric said at a briefing on Wednesday.

“We are hopeful, we will get the gas for the 450MW plant as we have already received all the approvals and licenses for the dedicated pipeline,” Alvi said. “We will be test running the first unit of the 900MW plant this March-April provided we get the 150mmcfd”.