Provinces demand representation in OGRA

Want to play role in policymaking and industry regulation

ISLAMABAD: Provinces have forcefully demanded that the Oil and Gas Regulatory Authority (Ogra) should be restructured on the model of power-sector regulator as they seek due representation in policymaking and regulating the oil and gas industry under the proposed reforms.

“Provinces want the Council of Common Interests (CCI) - an inter-provincial body - to approve the restructuring of oil and gas industry regulator Ogra and give them due representation,” a senior government official said.

They are also asking the CCI to clear policy documents prepared for third-party access rules, licensing and tariff methodology.

At present, Ogra is headed by the former managing director of Sui Northern Gas Pipelines Limited (SNGPL), which has sparked concern among provinces that want to protect their interests.

On the other hand, the provinces have representation and say in the National Electric Power Regulatory Authority (Nepra) - the power-sector regulator. Their members in Nepra play a significant role in policymaking and industry regulation. To the contrary, Ogra has no representation from provinces and all its members are nominated by the federal government.

As part of gas-sector reforms, the central government is working on splitting public gas utilities - SNGPL and Sui Southern Gas Company (SSGC) - into one transmission and four distribution companies in a bid to bring efficiency and  improvement in the transmission and distribution system and curb losses.

“Provinces, including Sindh which is the major gas producer, has agreed on the division of gas utilities with some conditions including representation in the new companies as well as the regulator,” said the senior government official while talking to The Express Tribune.

Under the proposed reforms, a nominated distribution company will buy gas from a province.Balochistan wants 100% shares and representation on the board of the provincial gas company along with management control.

The federal government is currently working on a two-tier pricing regime under which prices will be different for imported and locally produced gas.

Three provinces - Sindh, Khyber-Pakhtunkhwa and Balochistan, which are rich in oil and gas reserves - have agreed to this formula. They want the federal government not to pass the burden of expensive imported gas - liquefied natural gas - on to consumers of domestically produced gas.

Experts have welcomed the move to restructure the gas sector in order to bring efficiency. However, the central and provincial governments have been locked in a dispute over the consumption of locally produced gas as the latter believe that they have the first right to consume the energy being produced in their territory. Sindh, Khyber-Pakhtunkhwa and Balochistan are major producers of natural gas whereas Punjab has an insignificant share. But Punjab consumes a significantly higher volume of gas.

Under the reforms, Punjab may be depending more on the expensive imported gas, which may be damaging for the industry located in the province.

Published in The Express Tribune, January 9^th, 2018.

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