ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) on Tuesday advocated market-based return of around 11.3 per cent to gas distribution and 10.76pc to gas transmission under gas sector reform process but was opposed by almost all the stakeholders.
A word of advice came from Chief of Party, Energy Regulatory Partnership of the United States, J. Michael Biddison who believed pilot projects on localised gas markets should be first launched to demonstrate cost benefits before opening up the entire sector.
He also advised the policymakers and regulators to examine creating gas storages to play with shortages and oversupplies from imports in periods of low prices to stabilise reliable gas supplies. He said it could be done with fewer investments by utilising the old gas fields that have stopped producing more gas.
Mr Biddison, an expert in gas regulatory affairs and markets, said the reform should start from known strengths and weakness and barriers that may support or hinder progress in gas markets. “Conduct gas market localised pilot projects that can demonstrate cost/benefits and can be replicated at larger scale”, he said.
For a leap forward, he advised encouraging infrastructure and technology investments and introduce incentives that advance proven gas industry growth, like marketers, brokers, aggregator licensing, strong derivatives gas markets to better control gas prices.
He said the existing rates of return of 17.5pc (for SNGPL) and 17pc (for SSGCL) were too high and against the best practices. This is almost double the rates enjoyed by gas companies in the United States, he said.
On the other hand, the SNGPL team opposed rates of return proposed by the regulator.
The regulator has been conducting a series of consultative sessions in collaboration with the World Bank on the advice of the Ministry of Energy on gas sector reforms including third party access rules, network code and tariff regime.
Ogra Chairperson Ms Uzma Adil Khan said the consultative sessions were conducted in all provincial capitals and input from all stakeholders would be genuinely given due consideration and valid arguments will be incorporated in the final report. She said the federal government would be consulted on the issue who would finally take the decisions.
Responding to a question, she said some speculators were trying to create confusion and claiming that share price of gas companies was falling because of proposed gas sector reforms but this was not true because the prices of many other blue chip companies unrelated to gas sector like PSO and others had also dropped in recent days in the backdrop of overall market conditions.
Published in Dawn, December 13th, 2017