On the frontline: ECC constitutes panel to resolve gas pricing issue

Law minister accuses petroleum ministry of violating rules of business, says CNG policy is OGRA’s responsibility.

ISLAMABAD:

Federal Law Minister Farooq H Naek on Tuesday blocked approval of fresh guidelines, proposed to minimise use of gas in transport sector, after he found the petroleum ministry misusing powers of the Oil and Gas Regulatory Authority (Ogra) in violation of rules of business.

After Naek’s objection, the Economic Coordination Committee (ECC) constituted a panel to resolve the dispute, according to a Finance Ministry official. He added Naeq was of the view that according to the rules of the business it was Ogra’s mandate to suggest changes in the compressed natural gas (CNG) policy.

The fresh guidelines had been submitted by the Ministry of Petroleum and Natural Resources. According to the rules of business Ogra comes under the cabinet division and hence cannot be directed by the petroleum ministry.

According to an official handout, the ECC observed that CNG was an issue of public interest and there was a lack of unanimity among the stakeholders to agree on a pricing formula acceptable to all.



The panel will be headed by the law minister with adviser to the prime minister on petroleum and natural resources, chairman of Ogra and secretary Cabinet division as its members. The panel will formulate guidelines to determine pricing formula in consultation with all the stakeholders and resolve the dispute over the abuse of the rules of business by the petroleum ministry. The panel will submit its report in the next ECC meeting for final approval.

It was for the second time in less than a month when a federal ministry had been accused of working in violation of rules of business of the government that explicitly stated the functions and responsibilities of every government department and ministry.

Earlier, as stated in the summary the Ministry of Industries managed to get the age-limit of used cars reduced from five years to three years, a fact which the ECC overlooked as all matters relating to trade falls within the jurisdiction of the Ministry of Commerce.

In a meeting of the Public Accounts Committee (PAC), Sardar Ayaz Sadiq of PML-N alleged that Rs970 million in bribes were given for reducing the age limit of used cars. Secretary Industries Shafqat Naghmi who was also present in the PAC meeting did not confront Sadiq.

The misuse of Ogra’s powers by the petroleum ministry gives voices to apprehensions that the petroleum ministry was working on behest of the Liquefied Petroleum Gas (LPG) lobby that wanted the CNG business phased out and replaced by another alternative fuel option – LPG.

One of the recommendations of the petroleum ministry was that the CNG stations gradually be converted into LPG stations. They also suggested banning the use of CNG in private transport, increasing the CNG prices and bringing them at 80% parity of the petrol prices and continuous ban on CNG cylinders and kits.

The proposal to fix CNG prices at 80% parity of the petrol prices is in violation of the directives of the Supreme Court that earlier delinked the CNG-petrol parity.

In October, the apex court had annulled a memorandum of understanding between CNG associations and the government that resulted in one-third reduction in gas prices. Since then, the majority of the CNG stations had gone on strike by claiming that the business was no more profitable. This caused inconvenience for the CNG consumers. The memorandum allowed the CNG stations to fleece consumers as they were transferring all expenses onto consumers.

The ECC on Tuesday also allowed the Trading Corporation of Pakistan (TCP) to dispose 700 tons of imported sugar. The ECC discussed in detail all factors on the issue and decided to allow TCP to dispose.

Fertiliser sector to be given gas from dedicated sources

The ECC on Tuesday also approved in principle to allocate natural gas to fertiliser plants from new dedicated sources for long term.

This decision of the ECC was over a summary moved by the Ministry of Petroleum and Natural Resources.

The decision will help develop newly discovered sources of gas and will reduce pressure on existing transmission lines, according to the official statement.

ECC was informed that the fertiliser industry was located in close proximity of two gas fields –Mari and RetiMaru – and gas supply can commence from these new fields in a short period of time.

The fertiliser industry can develop the said gas fields and will lay their own dedicated pipelines for supply of natural gas at an agreed price mechanism.

The ECC further directed Ministry of Petroleum and Natural Resources to devise a detailed mechanism for long term allocation of gas to fertiliser sector.

Published in The Express Tribune, December 19^th, 2012.