September 16, 2002	Monday	Rajab 8, 1423

Please Visit our Sponsor (Ads open in separate window).

ISLAMABAD, Sept 15: The Water and Power Development Authority has demanded of the government to bring furnace oil pricing under the framework of Oil and Gas Regulatory Authority (OGRA).

Wapda Chairman Zulfiqar Ali Khan has raised the issue with President Pervez Musharraf that it was against the principle of justice to allow oil companies to fix the furnace oil prices independently and forcing the power utility to get its tariff approved from the National Electric Power Regulatory Authority (Nepra).

“A strange anomalous situation has been created where input costs are set by the private companies without any check and balance and the end-product (electricity) price of the public sector organization is set by a regulator,” an official quoted Wapda chairman as telling the president.

Sources said Wapda had also written a letter to the OGRA chairman to keep a check on furnace oil pricing by the oil companies through a proper regulatory framework in view of the fact that about 50 per cent furnace oil was produced locally.

Wapda is of the view that because of repeated fuel oil variations on fortnightly basis, it has to seek quarterly fuel-based tariff adjustments from Nepra and attract public criticizm for tariff hike despite the fact that it had no control over oil prices.

It believes that oil companies should be made to seek oil price revisions from the OGRA like power utilities which have to get approval for power tariff from Nepra.

The OGRA officials said although the Wapda demand was quite justified, the regulatory authority had no powers under the law to evaluate whether or not the fuel oil price fixed by the oil companies was transparent.

These officials said the OGRA was a toothless regulator as compared to Nepra because most of the pricing issues have been kept out of its jurisdiction under the OGRA Ordinance 2002.

Wapda has been saying repeatedly that fuel oil prices have increased by over 500 per cent since early 90s and a major part of Wapda revenue is consumed by the fuel component that made a big chunk of power tariff.

The government allowed oil companies early last year to enjoy complete freedom in fixing fuel oil prices at their own on fortnightly basis in the light of international oil prices as part of the petroleum sector deregulation. The local refineries follow prices fixed by the oil companies despite a major portion coming from the local production.