OGRA grants licence to Frontier Oil Co without cabinet’s nod

According to ECC decision, all future pipeline projects must be approved by cabinet

ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) has granted licence to Frontier Oil Company for laying an oil pipeline from Machike (Sheikhupura) to Tarujabba (Nowshera), ignoring the policy set by the federal government and hurting the interest of state-run Inter State Gas Systems (ISGS).

Earlier, the Economic Coordination Committee (ECC) had decided in a meeting on April 17, 2018 that proposals for all future oil pipeline projects should be sent to the federal cabinet for its consideration and approval. This meant that engineering company Frontier Works Organisation (FWO), which has formed the oil company for handling the project, would have to go first to the government with its project plan.



However, contrary to the decision, Ogra gave the go-ahead to Frontier Oil Pipeline for building the pipeline on the same route that the federal government had granted to ISGS. ISGS appeared as a major intervener at a public hearing conducted by Ogra.

During the hearing, FWO said it wanted to lay the oil pipeline from Machike to Tarujabba at an estimated cost of $370 million, which the Khyber-Pakhtunkhwa government described as cheap.

However, a senior government official told The Express Tribune that the ECC had endorsed the pipeline at a cost of $280 million, $90 million less than the estimate given by FWO, which was to be laid by ISGS.



ISGS officials objected to the grant of licence to Frontier Oil Company on the route that had already been approved by the federal government for ISGS, which had the right to construct the pipeline.

Furthermore, they pointed out, feasibility, financial and technical studies had been conducted by Frontier Oil Company itself, which was a conflict of interest.

ISGS officials contended that Ogra registrar did not follow legal procedures as the registrar was required to ask the applicant to provide policy guidelines of the federal government pertaining to the project.

The registrar ignored the obligation and accepted application of Frontier Oil Company, they said.



The officials pointed out that Hascol oil marketing company had provided annual output guarantee of three million tons of petroleum products whereas a latest report of the Oil Companies Advisory Committee (OCAC) put the company’s share at only 755,271 tons, which was substantially lower than what the company had committed.

Such inconsistencies led to serious doubts about credibility of the data and assumptions in the feasibility study, they told the regulator.

Published in The Express Tribune, July 12^th, 2018.

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