Restructuring of regulatory bodies soon
The government has decided to conduct a study to restructure regulatory bodies as some organisations exercise regulatory powers from within ministries, raising questions about their independence.
The government has described some as "blurred ministry and regulator roles". It feels that they are under the influence of some ministries and the regulatory bodies are exercising regulatory powers from within the ministries, which raise questions about the independence of regulators. The proposed focus of the study will be on making the federal regulators effective and accountable without eroding the independence credible regulation depends on.
Owing to this, the government is of the view that the situation requires a review. The role of regulators is to safeguard the interests of consumers but they are working under complete control of the ministries while ignoring the welfare of consumers.
Moreover, rapid expansion has taken place since 2024 and new authorities for virtual assets, seeds and food safety have come on stream. This also underscores the need for a review of the regulators to ensure their independence.
The government is working on autonomy versus accountability of the regulators. Recurring tariff, licensing and enforcement questions have been raised. In the energy sector, two regulators are functioning, whose decisions have a direct impact on consumers. These include the Oil and Gas Regulatory Authority (Ogra) and the National Electric Power Regulatory Authority (Nepra).
These regulatory bodies come under the administrative control of the cabinet but are following directives from the Ministry of Energy. Hardly, they are said to have taken decisions that shield the interests of consumers.
In the power sector, Nepra has allowed companies to set up power plants by giving the incentive of capacity charges, which put a burden of over Rs2 trillion on consumers every year. In a recent case, the regulator increased the multi-year tariff of K-Electric but reversed the decision following a motion filed by the Power Division. Such decisions are alleged to have caused controversies.
Earlier, in the rental power case, the Supreme Court ruled that Nepra should not follow the "manipulated" decisions of the Economic Coordination Committee (ECC).
Similarly, Ogra has been locked in controversies as in the past it granted licences to oil marketing companies despite not meeting the requirement of building storages. It also issued licences to LPG marketing companies in bulk, though only a few had LPG supplies.
Sources were of the view that the federal bodies with regulatory powers had been developed over seven decades, which now require a review under the present circumstances. The study will address three questions – how they were designed, how well they functioned and whether statutory aims were met.
It will also examine the purpose of the law and the failures each law fixes, whether it still holds and whether regulation is still the right tool. The study will propose key recommendations relating to legal, institutional, financial, capacity and system gaps.
The federal bodies have been divided into three groups. First is related to sector and independent regulators, which include Nepra, Ogra, the Pakistan Telecommunication Authority, State Bank of Pakistan, Securities and Exchange Commission of Pakistan, Competition Commission of Pakistan, Drug Regulatory Authority of Pakistan and Pakistan Virtual Assets Regulatory Authority.
The other category comprises technical, safety and professional services, which include Pak-Environmental Protection Agency, Pakistan Standards and Quality Control Authority, Pakistan Engineering Council, PNDC and quarantine departments. The third category has hybrid and borderline bodies including the Higher Education Commission, HRSA, Public Procurement Regulatory Authority, Alternative Energy Development Board, PDA and Special Technology Zones Authority.