Row over gas theft: Petroleum ministry to tighten pressure on OGRA

Regulator refusing to budge over shifting of Rs22b losses to consumers.

Zafar Bhutta December 22, 2012


The Ministry of Petroleum and Natural Resources has decided to approach the cabinet to tighten the noose around the Oil and Gas Regulatory Authority (Ogra) as the regulator is consistently resisting calls to shift burden of billions of rupees worth of gas theft and other losses to consumers.

According to sources, the ministry has prepared a set of proposals to pressurise Ogra to agree to its plan. The proposals say the regulator should be disbanded, but it has already been rejected by the prime minister, Ogra chairman and members should be given show-cause notices in a bid to terminate them eventually or the petroleum ministry should have powers to place its officials with the regulator.

“The petroleum ministry is going to take up this issue with the cabinet with an argument that Ogra has not followed the cabinet’s decision and therefore show-cause notices should be issued to its members and chairman,” a source aware of the developments said.

The cabinet has already approved the shifting of losses stemming from gas theft, low billing and lack of recovery in areas hit by law and order problems. However, before going ahead, it has called for formulating guidelines and placing a cap on these losses.


The petroleum ministry and Ogra are locked in a tussle as the former wants to put the ceiling at 4% (Rs22 billion), which will be charged from the consumers, but Ogra wants the ceiling at a lower level of 2% (Rs11 billion), sources say.

In case the whole burden is shifted, the consumers will be paying the cost of around 29.4 billion cubic feet of gas in a year – around 8% of the total gas supply.

Recently, Ogra has only allowed 4.5% of unaccounted-for-gas (UFG) – gas theft and leakage – to be recovered from the consumers of Sui Northern Gas Pipelines Limited (SNGPL) against actual UFG level of 11%.

“This recovery plan will also help high-ups of gas utilities to strike underhand deals for gas supply and force registered consumers to pay for the gas consumed by unregistered consumers,” the source say, adding this will allow gas utilities to cover more of UFG losses.

Gas companies argue that they suffer losses because of expansion of their distribution network on political grounds to please voters.

In addition to this, most of the consumers in areas affected by law and order problems do not pay bills, but the companies must continue gas supply in view of socio-political considerations.

Meter reading in insecure areas is also not possible and in most of the cases the consumers have removed their meters, they say.

In financial year 2011-12, the volume of gas theft was 11.17 and 2.06 billion cubic feet for SNGPL and Sui Southern Gas Company (SSGC) respectively. People living in insecure areas consumed 7.54 and 3.98 billion cubic feet of gas during the period.

Published in The Express Tribune, December 23rd, 2012.


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