ISLAMABAD: As the gas crisis worsens, the Oil and Gas Regulatory Authority (Ogra) has approved a network code in a hurry in order to allow private-sector companies the use of gas pipelines.
This was the last requirement for allowing private-sector companies the use of gas pipeline transporting system, which would end monopoly of state-run gas utilities on the marketing and distribution of gas in Pakistan. The delay in approving the code by the regulator and the previous government had blocked investment of millions of dollars in different gas projects like terminal building due to control exercised by the gas utilities.
This also resulted in low utilisation of liquefied natural gas (LNG) terminals despite payment of capacity charges as the private sector was not allowed to import LNG at cheaper rates, which could have exposed the LNG deal with Qatar inked by the previous government. Prime Minister Imran Khan on Wednesday took action to cope with the gas crisis and issued directives for initiating an inquiry into the heads of gas utilities.
Reacting to the development, Ogra on Thursday approved the network code, which had been pending since long, to avoid any action by the prime minister, said a government official. He said many foreign companies like Shell, ExxonMobil and Mitsubishi wanted to export LNG to private-sector stakeholders in Pakistan but could not utilise the idle capacity due to the monopoly of state-run gas companies.
In a statement, Ogra said the network code submitted by the Sui companies had been approved in pursuance of Rule 11 of Ogra Gas (Third Party Access) Rules 2018 with the objective of establishing a uniform contractual (operational) framework for third party access arrangements and the use of gas pipeline transportation systems.
This will promote the development of a competitive gas market by applying uniform principles to the relevant parties.
It will ensure fair, transparent and nondiscriminatory practices in all transactions concerning the use of gas pipeline transportation systems; prevent abuse of dominance and any potential anti-competitive conduct; and ensure the safe and reliable supply of gas and integrity of the gas pipeline transportation system. The network code is the common set of standard conditions governing access arrangement between the parties (transporters and shippers) including gas transmission licensees, gas distribution licensees, gas sale and connected system operators.
It is expected that the opening of the country’s gas market to third parties will promote import of LNG and facilitate growth in the natural gas sector. It will address the energy shortfall, secure energy supplies for growing domestic demand and promote economic growth by enhancing competition in the gas market.
Published in The Express Tribune, December 14th, 2018.