Govt planning to set up petroleum regulatory authority

It will define regulatory functions, attract investment, develop resource base

ISLAMABAD: The government is working on a plan to set up an independent Pakistan Petroleum (Exploration and Production) Regulatory Authority (PPEPRA) on the pattern of National Electric Power Regulatory Authority (Nepra) in a bid to define policy and regulatory functions for the upstream sector as well as attract investment and develop a resource base.

Work on establishing the authority got under way after several foreign companies pulled out of Pakistan in the past few years in the wake of bureaucratic hurdles and policy issues.

Now, the independent authority, when established, will provide a level playing field for the investors seeking to pour capital into the upstream petroleum sector.

The authority would be created in consultation with the provincial governments, sources said, quoting a plan submitted in a recent meeting of the Council of Common Interests (CCI).

Petroleum Division seeks Rs6.6b for LNG supply

The decision was taken in the wake of a proposal submitted by Sindh that called for setting up an independent upstream regulator with equal representation for provinces and on the model of Nepra.

Provincial chief ministers were informed that a summary was being processed, which would be submitted to the CCI for a decision in due course.

It would, however, be important to note that the upstream sector required a vibrant and dynamic regulator, which should encourage the deployment of technology for economical and socially responsible exploration of hydrocarbon resources aimed at substituting imports and developing an indigenous resource base.

Therefore, the meeting was told, it would be expedient that PPEPRA should be established as a technical regulator without any compulsion of having members on a provincial basis.

To address concerns of any province, it should be mandatory for PPEPRA to follow the policy guidelines approved by the CCI and an annual report should be submitted to the CCI containing all regulatory and other approvals and decisions made on a yearly basis.

Sindh had also come up with the demand that an amendment should be made to the Regulations of Mines, Oilfields and Mineral Development (Government Control) Act 1948.

A draft summary on the subject had already been circulated among the stakeholders for comments.

Secondly, Sindh demanded that the definition of "appropriate government" in the Mines Act 1923 be changed in light of Article 172 (3).

It said functions of the federal chief inspector of mines to the extent of oil and gas matters may be transferred to the respective provincial chief inspector of mines due to the deletion/omission of the concurrent list from the Constitution of Pakistan.

However, the federal government says Article 97, read with Article 142(a) and Clause 2 of Part 11 of the Fourth Schedule (Federal Legislative List) of Pakistan 1973, exclusively empowers the federal government to exercise the executive authority with respect to mineral oil and natural gas, liquids and substances, declared by federal law to be dangerously inflammable, including exercise of rights, authority and jurisdiction in and in relation to areas outside Pakistan.

Therefore, it said, the proposed amendment to change the definition of "appropriate government" would not be in line with the overall constitutional framework agreement.

The federal government said the Central Inspectorate of Mines was set up in 1966 by the government of Pakistan for the enforcement of Mines Act 1923, regulating the safety aspects in the federal sphere comprising mines of nuclear substance, oilfields and gas fields prior to the introduction of the concurrent list made under the 1973 Constitution.

Deadlock persists as provinces refuse to give up ‘first right of use’ of natural gas

The federal government says although the concurrent legislative list has been deleted under the 18th Constitution Amendment, the subjects of mineral oil, natural gas and nuclear substances and matters incidental/ancillary thereto have been retained on the federal legislative list without any change and the administrative and legislative authority for all matters connected therewith as such continue to vest in the federal government.

Published in The Express Tribune, December 28^th, 2019.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.