ISLAMABAD, March 27: The government has authorized Oil and Gas Regulatory Authority (OGRA) to regulate the business of liquefied petroleum gas (LPG) and compressed natural gas (CNG) with immediate effect.

OGRA chairman Munir Ahmad when contacted told Dawn the regulatory authority would have no powers to determine the prices of LPG and CNG.

He said the powers to regulate the safety, infrastructure and licensing of the two sectors were already in the OGRA ordinance, but the government had held these powers in abeyance to be revoked later, which had now been done.

He said OGRA did not have powers to determine the prices of any oil and gas item except prescribed price of gas utility companies, and consumers prices of natural gas were still outside OGRA’s purview.

According to a notification issued on March 15, the government had also amended the LPG rules 2001 and the CNG rules 1992 to transfer the powers to regulate the two sectors from director general gas of the petroleum ministry to OGRA.

The decision has been taken under the energy sector restructuring programme funded by the World Bank and the Asian Development Bank that entails complete deregulation of the oil and gas sector.

With this decision, OGRA will now regulate all LPG and CNG activities, including regulation of the existing licences as well as grant of new licences for setting up LPG or CNG production, distribution and marketing facilities.

Under the notification, any person or company interested in the grant of licence for the LPG-CNG production, distribution and marketing facilities will have to file application before OGRA on the prescribed format under the LPG (Production and Distribution) Rules 2001 for LPG and the Compressed Natural Gas (Production and Marketing) Rules 1992 for CNG.

OGRA has also set up a one-window facility for the interested persons, general public and the existing LPG and CNG licensees.

Meanwhile, OGRA has expressed its inability to control furnace fuel prices on purely legal and technical grounds, a demand Wapda has been making to control ever increasing power rates.

Wapda chairman Zulfiqar Ali Khan told Dawn recently that the powers of OGRA to regulate petroleum prices were also held in abeyance by the government which should not be the case.

OGRA believed that it may take over the subject of oil pricing at a later stage through amendments in the relevant clauses of the OGRA Ordinance 2002 if the government so desired, but in the existing setup, it had no jurisdiction over the oil pricing mechanism.

Wapda has been demanding 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 production was local.

The Wapda chairman had recently told 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 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 the Wapda chairman as telling the President.