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    SSGC   PK0002801014

SUI SOUTHERN GAS COMPANY LIMITED

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Sui Southern Gas : Centre to provide additional 500MW to KE, denies fuel shortage claim

06/27/2020 | 10:50am EDT

The federal government announced on Friday that it was ready to provide 500MW additional electricity to K-Electric (KE) from the national grid to end prolonged power cuts in Karachi.

However, it dismissed KE's claim that there was a shortage of furnace oil in the market and attributed the power outages in the city to the power company's system constraints.

The federal cabinet has already approved the provision of additional 1,100MW from the national grid to KE, but its system is not able to absorb the extra electricity at present and its upgrading will carry on until 2022-23 for that to happen, the energy ministry said in a statement.

'KE has wrongly attributed the power outages to the unavailability of fuel. The federal government is providing 800MW electricity to KE and is ready to provide additional 500MW from national grid,' the statement read. 'But the KE's system physical constraints are a major hurdle in taking the additional electricity. It clearly indicates that system upgradation on part of KE has not taken place at the appropriate level and with appropriate investment,' it added.

'It is unfortunate to note that KE did not make investment in the system upgradation and modernisation due to which it is facing difficulty at the time of peak demand.'

The ministry said the federal government had 'gone out of it is way' to provide support to KE and the people of Karachi. 'The federal government is ready to extend all available support for the provision of uninterrupted power supply to the residents of Karachi.'

The supply of LNG is available but on account of Article 158, only a limited quantity of LNG is being taken by KE. The Sui Southern Gas Company (SSGC) is providing a total of 250-290 mmcfd of gas including 75-100 mmcfd of LNG.

The petroleum division has made arrangements for the supply of 80% of the country's domestic residual fuel oil (RFO) production to KE to run its power plants. In addition, the federal government has also made arrangements for the supply of 30,000 tons of RFO from the storage of other power plant to immediately fulfill the requirements of KE.

'The federal cabinet also allowed for the Pakistan State Oil to float a Gallop International Tender to purchase RFO for KE. The tender has already been published,' the statement read.

The federal cabinet also approved the provision and allocation of 150 mmcfd of LNG for the new power plants of KE, the construction of which will be completed by the power company next year.

Separately, the National Electric Power Regulatory Authority (Nepra) has directed all power distribution companies (Discos) to ensure uninterrupted electricity supply to consumers.

The regulatory authority said it had taken serious notice of various media reports about unscheduled power outages lasting up to 12 hours a day by all Discos because of which the public was suffering in the current spell of heat wave, especially in the areas where a 'smart lockdown' had been enforced to stem the spread of Covid-19.

The power regulatory said Discos were obligated to provide uninterrupted and reliable power supply to the consumers under the relevant provisions of their licenses. Therefore, all Dicos have been strictly directed to take immediate remedial measures to minimise the load shedding and also submit a report in this regard to the authority immediately, it added.

A day earlier, KE maintained that the shortage of furnace oil had resulted in a shortfall in electricity production.

Owing to an increased demand of electricity in the city, systems have been badly affected, it added.

Technical faults including tripping of electricity feeders have become regular occurrences.

'With the onset of extreme hot and humid weather in Karachi, our peak demand has crossed 3450MW. Furnace oil is not available in the market to the level required resulting in up to 800 mt shortfalls daily. This has been in the news and the government is taking action by allowing imports,' the power company said in a statement.

'Also, a reduction of 50 mmcfd in regasified liquefied natural gas (RLNG) by the Sui Southern Gas Company has further added to the challenge.'

It added that power from the wind corridor had also been affected, resulting in the reduction of KE's power supply from 3,150MW to 2,800MW.

'The government had decided to import furnace oil and the situation is likely to normalise in the coming days.'

Unconvinced by KE's reasons, disgruntled citizens staged demonstrations in various areas against hours long load shedding and water shortage on Wednesday.

Residents staged a sit-in near Ghareebabad Chowrangi, blocked the road and chanted slogans against KE and the Karachi Water and Sewerage Board (KWSB).

They accused the companies of deliberately suspending power supply to rile up citizens and use it as an excuse to get further fuel concessions from the government.

The power utility said 'violent mobs' had caused damage to KE's grid station and offices.

'This endangers our teams and makes our job more difficult. We are working 24/7 to supply maximum power despite ongoing fuel shortage. Please bear with us at this challenging time.'

© Pakistan Press International, source Asianet-Pakistan

Stocks mentioned in the article
ChangeLast1st jan.
PAKISTAN STATE OIL COMPANY LIMITED -2.95% 184.78 End-of-day quote.-14.18%
SUI SOUTHERN GAS COMPANY LIMITED -1.45% 10.2 End-of-day quote.-29.75%
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Financials
Sales 2019 297 B 1 707 M 1 707 M
Net income 2019 -18 363 M -105 M -105 M
Net Debt 2019 62 204 M 357 M 357 M
P/E ratio 2019 -0,99x
Yield 2019 -
Capitalization 8 985 M 51,4 M 51,6 M
EV / Sales 2018 0,53x
EV / Sales 2019 0,27x
Nbr of Employees 6 943
Free-Float 100%
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Muhammad Imran Maniar Chief Executive Officer & Managing Director
Syed Fasihuddin Fawad Senior General Manager-Finance & Accounts
Shamshad Akhtar Chairman
Shah Mujtaba Ahmed Senior General Manager-Information Technology
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