ISLAMABAD: The government has tasked the Oil and Gas Regulatory Authority (Ogra) with finalising third-party access rules and a tariff methodology by the end of December this year in an effort to execute the plan of splitting large public gas utilities as part of critical reforms.
Talking to The Express Tribune, a senior government official said the Ministry of Energy (Petroleum Division) had decided to set firm timelines for putting in place the third-party access rules and tariff structure for new gas companies.
Gas utilities – Sui Northern Gas Pipelines and Sui Southern Gas Company – are being split in order to secure funds from the Asian Development Bank (ADB) and World Bank. The government has directed the utilities to hire a transaction adviser for conducting due diligence.
Under the plan, the government, facilitated by the World Bank, will separate transmission and distribution segments of the gas companies by setting up a transmission company and four distribution companies. The aim is to bring efficiency in service delivery and reduce losses.
However, the process, which was planned to be completed by the end of June 2017, has been delayed and is expected to be completed next year. Consequently, each province would have its own company.
The Petroleum Division has now decided to seek firm timelines from the gas utilities for hiring the transaction adviser and the timeframe for completing the adviser’s task. Both the companies have been asked to complete the process of separating the operational and accounting functions as soon as possible since this is one of the conditions laid down by the ADB and World Bank.
However, the government will be careful because it intends to allow everyone to reap fruits of the proposed reforms.
“The government will issue a policy statement, which is important to address concerns over the gas sector reforms,” the official said. “We will ensure in the policy statement that interests of all parties are safeguarded and there is no adverse impact of the reforms.”
Additionally, the regulatory environment will be made friendly for the implementation of reforms. Ogra – the regulator – will frame the third-party access rules since many parties are interested in gas transmission through the existing network.
Ogra had earlier proposed amendments to the rules after a thorough consultative process and subsequent notification by the Cabinet Division.
However, World Bank experts advised that the rules be drafted as broad principles, which could be changed more often and more easily in line with the changing circumstances.
Published in The Express Tribune, November 29th, 2017.