Scrapping over gas

If there is a single item guaranteed to get the provinces at one another’s throats it is how natural resources are shared and utilised. Pakistan is relatively rich in natural resources, with the primary sites of extraction being mostly outside Punjab which is by far the greatest consumer of a key resource — gas. The provinces are today demanding that the Oil and Gas Regulatory Authority (Ogra) must be restructured. Currently there is no provincial representation within Ogra and all its members are nominated by the federal government. The provinces want the matter referred to the Council of Common Interests (CCI) which does not have a stellar record when it comes to settling inter-provincial disputes. The CCI is also being asked to clear policy documents relating to third-party access rules and the methodologies relating to licensing and tariffs. The provinces are not without a voice as they are represented on the National Electric Power Regulatory Authority (Nepra) which is the day-to-day regulator and has a powerful say in policymaking.

Against this background the government is seeking to split public gas utilities in an attempt to bring some improvement in transmission and distribution and mitigate losses. Sindh is the major gas producer and has agreed to the division with some conditions but Balochistan has dug its heels in and wants 100 per cent shares as well as representation on the new companies as well as the regulatory bodies. The federal government is unlikely to be looking favourably on this proposal.

Key to making complex arrangements work is the two-tier pricing system which will have different prices for imported and gas produced locally — a bone of contention. With imported gas more expensive than locally-produced, the provinces are anxious that the cost of the imported gas (liquefied natural) is not passed on to the consumer. Punjab disagrees, but it is a minor player in production. If Punjab has to pay the market rate for the imported LNG, then there is going to be a knock-on effect which could be to the detriment of the industries based there that are dependent on natural gas as well as domestic consumers. Let the battle commence.

Published in The Express Tribune, January 10^th, 2018.

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