ISLAMABAD, Sept 3: The Oil and Gas Regulatory Authority on Wednesday granted licences to Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) for thirty years, but their monopoly on the sale of gas would end in 2010, when the private sector would be allowed to enter into the business.

The Oil and Gas Regulatory Authority (Ogra), a statutory body created with the purpose of regulating the oil and gas sectors, granted licences to the SNGPL, and SSGCL for thirty years, but did not accept their requests for complete monopoly on the sector, which they had asked on the grounds that they had heavy investment in the sector.

The SNGPL and the SSGCL, which were required to get licence for continuing operations from Ogra after its establishment in 2002, had applied for exclusive licences for transmission, distribution and sale of natural gas in Sindh, Balochistan and Punjab and NWFP, FATA, Federal Capital and AJK.

Munir Ahmad, the chairman Ogra annouced that the authority, after hearing all the parties concerned at length, had decided to grant licences to the petitioners for 30 years but their exclusivity would end in 2010.

“The licences granted to both the companies are basically non-exclusive but protect the petitioner’s investment through grant of exclusive rights to serve their existing as well as prospective consumers till 2010.”

He said the objective of the Ogra was to foster competition, to increase investment in the midstream and downstream oil and gas sectors and to protect the rights of the consumers.

Besides, the issuance of licences to the two main companies, Ogra also issued performance and service standards for the licence-holders.

Munir Ahmad, flanked by Javaid Inam, vice chairman, Ogra, and Rashid Farooq, member Oil, said that the licences obligated the holder to adhere to such approved technical, performance and consumer service standards which ensure high quality of service and safe practices related to workmanship, materials and equipment.

The chairman Ogra said any company interested in the business of transmission, distribution could approach the authority even tomorrow. He said that Ogra has given monopoly to SNGPL and SSGCL till 2010 only to the extent of sale of gas to consumers whom they have already reached.

The Ogra required the SNGPL, and SSGCL to issue demand notes for prospective consumers located on or near gas mains within 90 days of submission of applications. The connections would have to be executed within 45 days of deposits of security, and other charges. The companies would be required to issue gas bills regularly on monthly basis, allowing sufficient time for clearance. Reconnection, he said, would have to be made within one working day after payment of outstanding dues. The companies are directed to refund, if any, within one month.

The requirement of issuance of demand note within 90 days, faced immediate opposition from the managing director, SNGPL, Rashid Lone.

The MD SNGPL in his brief remarks, said that he was scared of the conditions imposed by the OGRA. He said the government has restricted the SNGPL not to give more than 100,000 new gas connections within a year, but the demand was double of that number. The issue would be taken up with the government and if it did not remove the limit, the company would have to approach the Ogra for reconsideration of its decision, he said.

Munawar Baseer, Managing Director SSGCL, however, welcomed the decision of Ogra, and hoped that it would generate competition in the gas sector which would ultimately benefit the consumers.

He said the SSGCL was committed to the Ogra decision, and was not afraid of it. He, however, said that the issue of removing connections limit imposed by the federal government, needed to be addressed. He said that the annual limit of gas connections for SSGCL was 50,000, but the demand was two times of that number.