ISLAMABAD: The provinces on Thursday rejected oil and gas regulatory reforms proposed by the federal government on the advice of the World Bank, and, instead, demanded a greater role for them in the exploration and production of hydrocarbon resources.

At a meeting presided over by Prime Minister Shahid Khaqan Abbasi, the provinces, particularly Sindh and Khyber Pakhtunkhwa, demanded that the proposed Pakistan Petroleum Exploration and Production Authority (PPEPRA) be an independent forum under the aegis of the Council of Common Interests (CCI). The meeting was attended by the chief ministers of Sindh and Balochistan, besides the provincial energy ministers and secretaries, the Oil and Gas Regulatory Authority chairperson and an eight-member team of World Bank officials.

The provinces also rejected the composition of the PPEPRA — a chairperson and four members for Exploration, Production, Strategy and Finance, and Legal and Compliance — as proposed by the Centre.

Instead, they proposed that there be five members in the authority — from the centre and the four provinces. One of the five should be designated the chairperson and another as a vice chairperson on rotation basis. The first chairperson should be nominated from Baloch­istan and the vice chairperson from the centre for the term of one year each.

Reject oil and gas regulatory reforms proposed by federal govt on advice of the World Bank

The provinces were of the view that the PPEPRA at the federal level should deal with matters pertaining to oil and gas pricing and petroleum concession management offshore, in AJK, Fata and Gilgit-Baltistan, while the petroleum concession in the provinces should be devolved to the provincial energy regulatory bodies.

Khyber Pakhtunkhwa’s Energy Minister Atif Khan challenged the World Bank’s proposal for unbundling Sui companies and said it was long-standing demand of his province that unbundling of gas companies and upstream petroleum regulatory reforms should be conducted “in light of the 18th Amendment of the Constitution, while the federal model is against the provincial rights guaranteed in the Constitution”.

He lamented that during the past four years, the federal regulator had not been able to award a single block which, he claimed, had hampered oil and gas activities and resulted in billions of rupees loss to the provincial government in the form of royalty and gas development surcharge, etc.

Sindh Chief Minister Murad Ali Shah supported Khyber Pakhtunkhwa’s position and added that the federal government was reluctant to address the issues raised by the provinces.

Ultimately the matter would land with the CCI for a decision, he said, adding that the CCI was the only forum where the provinces could be heard.

The two provinces proposed devolution of regulatory functions to the provinces in light of Article 172 of the constitution.

The prime minister told the participants that the new policy, regulations and technical framework would be perfectly compliant with the constitutional provisions and assured that all constitutional issues pertaining to the gas sector were being addressed at the level of the CCI. He said while constitutional matters were being dealt with at an appropriate level, the process of operational and tactical reforms should continue.

An official statement said the meeting had supported, in principle, to carry forward the reforms process and pledged to contribute towards providing a sustainable and efficient gas exploration, production, transmission, and distribution system.

“The prime minister assured the provinces of his personal commitment to work with each chief minister to deliver the reform programme,” it said.

The Punjab minister for finance said the government of Punjab had already constituted a committee to discuss gas sector reforms and emphasised that financial sustainability should be ensured while moving forward on the proposals.

Published in Dawn, September 29th, 2017