Curtailing price manipulation: Govt studying new law to empower OGRA
Amendments could allow regulator to impose minimum fine of Rs1m for cartel formation.
According to sources, the government is considering a minimum fine of Rs1 million that will be imposed by the regulator – the Oil and Gas Regulatory Authority (Ogra). CREATIVE COMMONS
ISLAMABAD:
The government is working on a new law that will empower the oil and gas industry regulator to slap fines and penalties on the oil barons that form a cartel to charge high prices from consumers and pocket billions of rupees.
“In this regard, the Cabinet Division is studying amendments to the Ogra ordinance in an effort to allow the regulator to monitor prices of all refined oil products,” an official said.
According to sources, the government is considering a minimum fine of Rs1 million that will be imposed by the regulator – the Oil and Gas Regulatory Authority (Ogra).
In October 2010, the Economic Coordination Committee (ECC) of the cabinet had allowed major oil companies to set prices of petroleum products except for kerosene oil and reduced Ogra’s role to just a ‘monitor’ without any defined powers to tackle price and market manipulation.
The government was supposed to make amendments to the Ogra Ordinance in order to give the monitoring role to the regulator, but no changes had been made so far.
Now, a law was being framed that would empower and permit Ogra to impose fines on oil marketing companies (OMCs) and protect the interest of consumers, sources said.
In February this year, the Cabinet Division pressed the ECC to give the go-ahead to making changes in the Ogra ordinance for empowering the regulator, but the civil bureaucracy and ruling elite scuttled the move.
Finance Secretary Dr Waqar Masood, Science and Technology Minister Zahid Hamid, some other ECC members and top bureaucrats joined hands to block the amendments.
However, according to officials, Finance Minister Ishaq Dar and Petroleum Minister Shahid Khaqan Abbasi were in favour of giving powers to the regulator.
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. “Now, this committee has given its recommendations to the cabinet,” the official said.
During the February meeting of the ECC, the bureaucrats and some ministers argued that 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 price of kerosene oil whereas other petroleum products are deregulated and their prices are set keeping in view the cost of import borne by Pakistan State Oil.
Though Ogra keeps a check on petroleum product prices, it lacks powers and any company or individual can go to court if action is taken against forming a cartel, overpricing and any other market manipulation.
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 manipulation.
The matter would now again be put before the ECC for approval and subsequently before the Council of Common Interests (CCI) for a final decision.
Published in The Express Tribune, May 8th, 2014.
The government is working on a new law that will empower the oil and gas industry regulator to slap fines and penalties on the oil barons that form a cartel to charge high prices from consumers and pocket billions of rupees.
“In this regard, the Cabinet Division is studying amendments to the Ogra ordinance in an effort to allow the regulator to monitor prices of all refined oil products,” an official said.
According to sources, the government is considering a minimum fine of Rs1 million that will be imposed by the regulator – the Oil and Gas Regulatory Authority (Ogra).
In October 2010, the Economic Coordination Committee (ECC) of the cabinet had allowed major oil companies to set prices of petroleum products except for kerosene oil and reduced Ogra’s role to just a ‘monitor’ without any defined powers to tackle price and market manipulation.
The government was supposed to make amendments to the Ogra Ordinance in order to give the monitoring role to the regulator, but no changes had been made so far.
Now, a law was being framed that would empower and permit Ogra to impose fines on oil marketing companies (OMCs) and protect the interest of consumers, sources said.
In February this year, the Cabinet Division pressed the ECC to give the go-ahead to making changes in the Ogra ordinance for empowering the regulator, but the civil bureaucracy and ruling elite scuttled the move.
Finance Secretary Dr Waqar Masood, Science and Technology Minister Zahid Hamid, some other ECC members and top bureaucrats joined hands to block the amendments.
However, according to officials, Finance Minister Ishaq Dar and Petroleum Minister Shahid Khaqan Abbasi were in favour of giving powers to the regulator.
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. “Now, this committee has given its recommendations to the cabinet,” the official said.
During the February meeting of the ECC, the bureaucrats and some ministers argued that 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 price of kerosene oil whereas other petroleum products are deregulated and their prices are set keeping in view the cost of import borne by Pakistan State Oil.
Though Ogra keeps a check on petroleum product prices, it lacks powers and any company or individual can go to court if action is taken against forming a cartel, overpricing and any other market manipulation.
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 manipulation.
The matter would now again be put before the ECC for approval and subsequently before the Council of Common Interests (CCI) for a final decision.
Published in The Express Tribune, May 8th, 2014.