NEPRA approves a 10-year capacity expansion plan

KARACHI: The Sui Southern Gas Company (SSGC) has agreed to enter into an arbitration agreement with K-Electric (KE) to finalize the payment process which will get approval from the Economic Coordination Committee (ECC) on Friday.

This approval will also help in KE’s acquisition by Shanghai Electric Power (SEP). Since both companies are utility companies, it is in the public interest to resolve the issue as soon as possible without compromising the interest of SSGC. Both stakeholders agreed to resolve the matter through mediation at the direction of the ECC.

According to local media, KE had submitted an application in 2016 for National Security Certificate (NSC) to the Privatization Commission in a bid to transfer 66.4 per cent shares to SEP. SSGC has agreed to enter into an arbitration agreement with KE.

Earlier, ECC was to hold this meeting on Wednesday to deliberate on the issue. However, SSGC management wanted the government to give direction in writing to settle a dispute with KE over receivables through arbitration, the source said.

The board of directors has also authorised the managing director of SSGC to sign an arbitration agreement under the umbrella of the federal government, the source added.

However, it also directed the management to properly document and qualify the concerned officials of the ministries involved in the arrangement, including the Special Assistant to Prime Minister (SAPM).

An official said the proposed arbitration process involved a number of agencies, but will be conducted through a single mediator. It says that the federal government must ensure in writing that KE should execute gas supply agreements (GSA) with SSGC after the conclusion of arbitration proceedings.

The SSGC should have a principled approach to the treatment of later payment surcharge (LPS). The SSGC added that in order to seek clarification on various issues, the board asked the management to provide feedback on aspects of the arrangement.

The board discussed the matter with the salient features of the draft arbitration agreement and said that the dispute between SSGCL and KE is a matter of long delay which can be resolved through bilateral negotiations or in court.


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