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

The Sui Southern Gas Company (SSGC) has disconnected gas supply to Pakistan Steel Mills Limited (PSML) due to non-payment of outstanding dues amounting to Rs97.697 billion as of June 30, 2024, which includes a late payment surcharge of Rs73.4 billion.

As per news reports, SSGC said that PSML began defaulting on its monthly gas payments in November 2008 and completely stopped payments after March 2015. In response, SSGC issued multiple termination notices in 2015 and gradually reduced gas supplies from 21 MMCFD in FY 2014-15 to 2 MMCFD in FY 2015-16 to keep the Coke Oven Batteries of PSML intact.

Despite these measures, PSML’s payments remained irregular. From February 2020, PSML started making current monthly payments due to budgetary allocations and bailout packages from the Federal Government. However, these funds were often delayed, causing financial strain on SSGC.

Efforts by the Federal Government, including the Privatization Commission, Ministry of Industries and Production, and Ministry of Energy (Petroleum Division), to revive PSML have been ongoing. In 2021, a proposal to transfer PSML’s core assets to a new subsidiary was floated, but the privatization process did not succeed.

A recent communication from PSML referenced an ECC meeting decision stating that no further payments for gas consumption would be made beyond June 30, 2024, to prevent additional federal liabilities to SSGC. 

Following this, SSGC sought clarification and issued a disconnection notice to PSML, which went unanswered. Consequently, SSGC discontinued gas supplies to PSML on July 4, 2024.