Tethering the watchdog: OGRA once again slips petroleum ministry’s noose

Prime minister, fearing political repercussions, refuses to disband regulator.

ISLAMABAD:

Fearing a backlash from the media, judiciary and international donors, Prime Minister Raja Pervez Ashraf has turned down a proposal calling for the dissolution of the Oil and Gas Regulatory Authority (Ogra).

Sources told The Express Tribune that Dr Asim Hussain, the adviser to the prime minister on petroleum and natural resources, had tabled a draft before the premier that called for disbanding Ogra. Sources said the move was a reprisal against the regulator for its strong stance against passing on a Rs22 billion burden on to gas consumers for gas stolen, under-billed, or unaccounted-for. Hussain was not available for comment.

“If we dissolve the regulator, the government will face strong criticism from international lenders and the media,” sources quoted the prime minister as saying. International lenders hold a strong belief in the role and autonomy of an external regulator in the sector. Sources added that the premier also feared that the upper judiciary may swing into action over the move.

Earlier, the petroleum ministry had moved a different summary to the prime minister requesting that Ogra be brought under its control. That proposal, too, had been cast out.

Meanwhile, while addressing a press conference, Ogra Chairman Saeed Khan said that gas utilities were increasingly indulging in “stealing” gas themselves, which was why the regulator had refused to shift the burden of losses incurred due to gas theft on to consumers. Khan said that Sui Northern Gas Pipelines’ (SNGPL) gas losses on account of theft and leakages in the ongoing fiscal year stood at Rs14.2 billion, while those incurred by the Sui Southern Gas Company (SSGC) stood at Rs2.3 billion.

During 2010-11, total losses incurred by the country due to gas theft stood at Rs9.8 billion; wherein SNGPL’s system was responsible for Rs6.3 billion of unaccounted-for gas, while SSGC’s system was responsible for Rs3.5 billion worth of ‘lost’ gas.

Khan observed that gas losses were only increasing with the passage of time, and said they may exceed in the coming years due to widespread inefficiency in gas utilities. “We have rejected a request from gas utilities to recover the [monetary] amount of gas theft from consumers. [Furthermore], millions of rupees in penalties have been imposed on gas firms due to their poor performance in tackling the issue of gas theft and inefficient service delivery to consumers,” Khan said. He also said Ogra would not allow honest consumers to be charged for gas utilities’ failure to improve their systems.

Khan noted that the authority had already approved a figure of 4.5% that could be charged by SNGPL from consumers as Unaccounted for Gas (UFG), but the utility had failed to restrict its line losses to that limit and instead incurred nearly 11% losses under the UFG head.

To a query, he said that Ogra could not allow gas utilities to exceed the fixed UFG ratio allowed to them, and that they would have to manage it according to the law.

The Ogra chairman also said that Ogra has so far not received any guidelines from the ministry over the CNG prices issue; however, he pledged to resolve the issue before December 17, when the Supreme Court is next scheduled to hear the case.

While responding to a question, Khan said that Ogra had asked CNG association to provide details of their accounts in order to enable the regulator to compute an acceptable price of CNG that would pacify all stakeholders involved.

He also reiterated that the regulatory body has always followed the Supreme Court’s directions and the government’s missives which did not go contrary to the regulations governing Ogra.

Published in The Express Tribune, December 8^th, 2012.