SSGC Halts Gas Supply to Pakistan Steel Mills Over Rs98 Billion Default


ISLAMABAD: Sui Southern Gas Company Ltd (SSGC) has disconnected gas supply to Pakistan Steel Mills (PSM) due to chronic payment defaults amounting to Rs98 billion, including Rs75 billion in interest and late payment surcharges.

The Karachi-based gas utility stated that PSM began partially defaulting on monthly gas bill payments in November 2008 and ceased all payments after March 2015. Despite multiple termination notices issued in 2015, SSGC reduced gas supplies from 21 million cubic feet per day (mmcfd) in 2014-15 to 2 mmcfd in 2015-16 to maintain PSM’s Coke Oven Batteries and support potential future revival plans.

From February 2020, PSM resumed monthly payments to SSGC through federal government bailout funds, though delays continued to strain SSGC financially. A recent Economic Coordination Committee (ECC) decision to halt further payments for PSM’s gas consumption beyond June 30, 2024, prompted SSGC to issue a final disconnection notice. With no response from PSM, SSGC disconnected gas supplies on July 4, 2024, after informing relevant federal ministries.

PSM was shut down in June 2015 by the PMLN government when its capacity utilization increased from below 10% to over 60%, nearing a break-even point at 70%. Future plans for PSM’s 17,000 acres include setting up a new steel mill, likely in the private sector, and establishing an export processing zone.

Story by Khaleeq Kiani

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