Oil and gas regulator: New guidelines should not disturb ongoing probe into OGRA scam, says ECC

With the approval of incentives, UFG ceiling may in effect reach 10%.

ISLAMABAD: Economic managers are insisting that fresh guidelines for the Oil and Gas Regulatory Authority (Ogra) should not adversely affect ongoing investigations into a scandal in the wake of Supreme Court’s directive.

“The provisional arrangement (new guidelines) must not contravene a judgment of the Lahore High Court on the issue nor should it adversely affect ongoing investigations into the Ogra scandal in line with the directive of the Supreme Court,” the Economic Coordination Committee (ECC) said in a decision taken on November 20.

The stress on pushing ahead with the probe comes after suggestions that Ogra scam is dying its natural death after the approval of fresh guidelines by the ECC for the regulator.



The ECC decision has exposed the reality behind the investigation into the scam, which was allegedly initiated to tighten the noose around some business rivals. The guidelines will help pass on the total impact of unaccounted-for-gas (UFG) losses amounting to Rs40 billion to honest consumers, who are regularly paying their bills.

The incentives were similar to those approved in 2010 by Ogra, then headed by Tauqeer Sadiq.

Sadiq had decided to raise the UFG ceiling from 5% to 7% along with some other measures. Tactfully, the present government has taken different measures, which will in effect take the UFG level to 10%, which will be recovered from the gas consumers.

Following Sadiq’s move, share prices of gas utilities – Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) – rose sharply and now after the approval of fresh guidelines stock prices have jumped again.

According to the guidelines, the impact of change in the bulk-retail ratio using 2003-04 as base year will lead to a 4% increase in UFG ceiling.

At present, bulk consumers constitute 28% of the total whereas retail consumers account for 72%. In comparison, bulk consumers were 56% and retail consumers were 44% in 2003-04. Retail consumers are said to be the major cause of UFG loss.

“By using 2003-04 as base year to calculate UFG, it will result in an increase of four percentage points in the ceiling from the current 4.5% set by the regulator to 8.5%,” an official said.

The ECC has also approved other measures to determine the gas sales volume like the quantity consumed by unregistered consumers, volume consumed in law and order-stricken areas, volume against minimum billing and income from non-core activities.

“The cumulative impact of all these measures will take UFG to around 10%, which the regulator has allowed to be collected from those consumers who are regularly paying bills,” the official said.

One per cent UFG meant Rs4 billion and the consumers would be paying Rs40 billion to the inefficient gas utilities, the official added.

These companies have failed to undertake steps to control gas theft and instead of taking them to task, more burden has been put on honest consumers.

Published in The Express Tribune, December 10^th, 2014.

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