Lobbies look more powerful than regulator

Consumers forced to pay for inefficiency of gas companies, theft.

ISLAMABAD: The fresh policy guidelines on shifting the cost of gas theft and company losses to the consumers approved by the Economic Coordination Committee (ECC) in the previous week for the Oil and Gas Regulatory Authority (Ogra) suggest that the mega scam at the regulator may be a myth.

Former Ogra chairman Tauqeer Sadiq had approved the same initiatives to steer gas utilities out of trouble following pressure from the Pakistan Peoples Party (PPP) government at that time. Now, he is behind bars facing charges of being involved in a multi-billion-rupee scandal.

However, the guidelines put in place by the present government prove that billions of rupees will go into the pockets of state-owned gas utilities and shift the burden of Rs49 billion, caused by gas theft and other losses in areas where law and order situation is weak, on to honest consumers.



Following an increase in the unaccounted-for-gas (UFG) ceiling, which covers theft and leakage, from 5% to 7% by Ogra in 2010, then headed by Sadiq, the gas transmission and distribution firms earned an additional Rs49 billion.

The National Accountability Bureau (NAB), however, termed it a scam. In the Supreme Court, NAB first put the size of the scandal at Rs82 billion, but later reduced it to Rs26 billion in a reference submitted to the National Accountability Court.

NAB was seeking to recover the extra collection of Rs49 billion from the gas companies, but with the new guidelines the economic decision-makers have targeted the consumers and provided relief to the companies, where the money was stuck due to stay orders granted by courts.

Apart from this, the combined financial impact of the incentives will take UFG to 8%, which means that the consumers will be paying an additional Rs32 billion every year to pay the cost of inefficiency and theft faced by gas companies.

Now, the companies may not see their profits take a hit even after the hefty losses caused by gas theft. Though the government has promulgated a new gas theft act, it has failed to stop the stealing of the vital energy source.

Share prices go up

On the back of the ECC’s decision last week, share price of Sui Southern Gas Company (SSGC), one of the two gas utilities, went up to Rs33.73 from Rs22. This price movement reflected a similar increase in the company’s share price, as NAB alleged, following the increase in UFG ceiling by Sadiq.

The Securities and Exchange Commission of Pakistan (SECP) had prepared several expert reports on the scam, but nothing could be proved. Several influential people made billions because of the rise in share prices of the utilities.

A myth or a reality

Is the Ogra scam a myth or a reality, is a big question mark after gas firms emerge as the major beneficiaries of the relief in UFG ceiling.

Petroleum ministry officials say the companies had been demanding an increase in the ceiling since 2005, citing the socio-economic, political and law and order situation of the country. The 7% UFG benchmark was reasonable and it was their right to claim that, they say.

Giving estimates, they point out that Sui Northern Gas Pipelines Limited (SNGPL) was facing an annual loss of Rs5 billion in Karak, Khyber-Pakhtunkhwa whereas SSGC was posting 30% of the total loss in Balochistan due to the poor law and order situation. The companies would have gone bankrupt had they been not given incentives, they suggest.

All this shows that influential lobbies are more powerful than the regulator, which was established to safeguard the interests of consumers. It does not look like an independent body that could take its own decisions.

Even its members are appointed on political grounds to serve the interests of the lobbies. Who would take care of the interests of consumers who are dragged into courts for being unable to pay small bills, needs to be answered.

THE WRITER IS A STAFF CORRESPONDENT 

Published in The Express Tribune, November 24^th, 2014.

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