SSGC cuts gas supply to Pakistan Steel Mills over Rs97.7 billion unpaid dues

WEB DESK: The Sui Southern Gas Company (SSGC) has disconnected gas supply to Pakistan Steel Mills Limited (PSML) due to non-payment of a substantial outstanding amount. As of June 30, 2024, PSML owes SSGC Rs97.697 billion, including Rs73.4 billion in late payment surcharges (LPS).

PSML began defaulting on its monthly gas bill payments in November 2008 and ceased all payments after March 2015.

Despite numerous termination notices issued by SSGC in 2015, the gas company continued to supply gas to PSML, albeit at a reduced rate. From 21 MMCFD in FY 2014-15, supplies were gradually reduced to 2 MMCFD in FY 2015-16 to maintain the integrity of PSML’s Coke Oven Batteries and support potential revival efforts.

Although PSML started making monthly payments in February 2020, these were often delayed due to slow release of funds from the Federal Government’s bail-out packages.

Despite this, SSGC continued to support PSML by supplying gas and participating in revival discussions, including a 2021 proposal to transfer PSML’s core assets to a new subsidiary, which ultimately did not materialise.

A recent Economic Coordination Committee (ECC) meeting concluded that no further payments for gas consumed by PSML would be made beyond June 30, 2024, to prevent additional federal liabilities. Consequently, SSGC sought clarification from PSML and, after receiving no response, issued a disconnection notice.

On July 4, 2024, SSGC discontinued gas supplies to PSML after the deadline expired, coordinating with all relevant federal ministries. Throughout this period, SSGC made numerous efforts to support PSML by continuing gas supplies despite irregular and delayed payments.

Ultimately, the failure of PSML to honour its payment commitments and the discontinuation of federal financial support led to the termination of gas supply.

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