Tackling manipulation: Govt officials scupper plans to empower oil regulator
Oppose amendments to ordinance that allows OGRA to slap fines on OMCs.
Though Ogra keeps a check on petroleum product prices, it lacks powers under the ordinance and any company or individual can go to court if action is taken against forming a cartel, overpricing or any other market manipulation. PHOTO: FILE
ISLAMABAD:
The civil bureaucracy and the ruling elite have blocked attempts aimed at empowering the oil and gas industry regulator to slap fines and penalties on oil marketing companies (OMCs) for allegedly forming a cartel to charge higher prices and pocket billions from consumers.
The move came after the Cabinet Division tabled a summary before the Economic Coordination Committee (ECC), seeking approval of amendments to the Ogra ordinance in order to allow the regulator to monitor prices of all refined oil products, sources said.
Finance Secretary Dr Waqar Masood, Science and Technology Minister Zahid Hamid, some other ECC members and top bureaucrats joined hands and scuppered plans to push through the amendments. The changes in the law would have permitted the regulator to impose fines and penalties on the OMCs for alleged tampering with the deregulated oil pricing mechanism.
Bureaucrats and some ministers argued that the Oil and Gas Regulatory Authority (Ogra) was already monitoring prices of petroleum products and there was no need to revise the law. Any such amendment would spoil the investment environment in the oil industry, they pointed out.
At present, Ogra only regulates the kerosene oil price whereas other petroleum products are deregulated and their prices are set keeping in view the rates at which these are imported by Pakistan State Oil.
Though Ogra keeps a check on petroleum product prices, it lacks powers under the ordinance and any company or individual can go to court if action is taken against forming a cartel, overpricing or any other market manipulation.
In the meeting, some of the ECC members, who were in favour of amending the Ogra ordinance, suggested that after the proposed changes, the government would frame rules to clear the way for taking action against the OMCs for any misappropriation.
According to sources, they stressed that Ogra was not legally empowered to monitor petroleum prices and could not take action to protect the interest of consumers. In such a scenario, amendments to the ordinance were required to empower the regulator.
Petroleum and Natural Resources Minister Shahid Khaqan Abbasi also backed the proposal, they said.
However, considering the concerns raised by different quarters, the ECC decided to constitute a committee led by the minister of science and technology with secretaries of the ministries of law and justice and finance and Ogra as members.
The committee will consider afresh the proposed and other amendments, if any, to the Ogra ordinance before sending them to the ECC for approval and subsequent placement before the Council of Common Interests (CCI) for a final decision.
Published in The Express Tribune, February 14th, 2014.
The civil bureaucracy and the ruling elite have blocked attempts aimed at empowering the oil and gas industry regulator to slap fines and penalties on oil marketing companies (OMCs) for allegedly forming a cartel to charge higher prices and pocket billions from consumers.
The move came after the Cabinet Division tabled a summary before the Economic Coordination Committee (ECC), seeking approval of amendments to the Ogra ordinance in order to allow the regulator to monitor prices of all refined oil products, sources said.
Finance Secretary Dr Waqar Masood, Science and Technology Minister Zahid Hamid, some other ECC members and top bureaucrats joined hands and scuppered plans to push through the amendments. The changes in the law would have permitted the regulator to impose fines and penalties on the OMCs for alleged tampering with the deregulated oil pricing mechanism.
Bureaucrats and some ministers argued that the Oil and Gas Regulatory Authority (Ogra) was already monitoring prices of petroleum products and there was no need to revise the law. Any such amendment would spoil the investment environment in the oil industry, they pointed out.
At present, Ogra only regulates the kerosene oil price whereas other petroleum products are deregulated and their prices are set keeping in view the rates at which these are imported by Pakistan State Oil.
Though Ogra keeps a check on petroleum product prices, it lacks powers under the ordinance and any company or individual can go to court if action is taken against forming a cartel, overpricing or any other market manipulation.
In the meeting, some of the ECC members, who were in favour of amending the Ogra ordinance, suggested that after the proposed changes, the government would frame rules to clear the way for taking action against the OMCs for any misappropriation.
According to sources, they stressed that Ogra was not legally empowered to monitor petroleum prices and could not take action to protect the interest of consumers. In such a scenario, amendments to the ordinance were required to empower the regulator.
Petroleum and Natural Resources Minister Shahid Khaqan Abbasi also backed the proposal, they said.
However, considering the concerns raised by different quarters, the ECC decided to constitute a committee led by the minister of science and technology with secretaries of the ministries of law and justice and finance and Ogra as members.
The committee will consider afresh the proposed and other amendments, if any, to the Ogra ordinance before sending them to the ECC for approval and subsequent placement before the Council of Common Interests (CCI) for a final decision.
Published in The Express Tribune, February 14th, 2014.