ISLAMABAD: The Competition Commission of Pakistan (CCP) has suggested to Oil and Gas Regulatory Authority (Ogra) to exercise its powers and take a decision regarding issuance of licences for flare-gas distribution which would also help reduce ongoing energy crisis in the country.

The CCP made the recommendation after receiving concerns from potential market entrants in the market for flare-gas storage, distribution and transportation.

“Market entrants need to apply for licence to Ogra, but potential entrants have claimed that applications remain pending with the oil and gas regulator,” the CCP said.

Flare-gas is regarded as a by-product at the oil and gas production fields, and using flare-gas can help augment supply of gas in the country.

Till now flare-gas has not been utilised in Pakistan, but it may provide a stepping stone for new entrants that are aspiring to enter the market for supply of natural gas.

Flare-gas can be compressed for easy storage and transportation using gas bowsers. In its policy note, the CCP assessed the possible anti-competitive impacts of such an impediment.

The CCP said that the institutional delay in issuance of licences lengthened the time for a new entrant to enter the market, and it was benefiting the existing firms and making the market less competitive.

Responding to CCP policy note, Ogra said that the monopoly of Sui Northern Gas Pipelines Company Limited (SNGPL) and Sui Southern Gas Pipelines Company Ltd (SSGCL) for transmission and distribution of gas ended on June 30, 2010.

Ogra stated that the current flare-gas policy issued by the federal government did not provide any guidance to determine the producer price for flare-gas, tariff applicable for future similar cases and the tariff applicable for potential consumers.

The CCP policy note said, “Ogra’s mandate was to foster competition and increase investment in the midstream and downstream market for petroleum.”

However, the CCP has blamed Ogra for creating hurdles in developing the new market of flare gas.

It recommended to the Ogra to take a decision on the issuance of licences at the earliest as it would not only help attract much needed investment but would also incentivise incumbent service providers to be more efficient and innovative which would in turn benefit consumers.