ISLAMABAD: The government is set to promulgate Pakistan Petroleum (Downstream Oil Sector) Rules, 2020 to transfer all oil and gas related regulatory functions and powers to the Oil and Gas Regulatory Authority (Ogra), currently being exercised by a sub-ordinate department of the Petroleum Division.

The decision was taken following an advice from the law ministry which pointed out that after the promulgation of Ogra Law of 2002, powers being exercised by the directorate general (DG) oil of the Petroleum Division were in violation of law. “The provision of section 43, Ogra Ordinance overrides all other powers. It is settled law that rules being subordinate legislation cannot override the statute”, said the Ministry of Law.

Before Ogra Ordinance 2002, the downstream oil sector was regulated by the government under the Pakistan Petroleum (Refining, Blending and Marketing) Rules, 1971. DG oil, working under the Petroleum Division was the designated authority in the said rules.

In March 2006, downstream oil regulatory functions were partly transferred to Ogra through amendments in the Pakistan Petroleum (Refining, Blending and Marketing) Rules. Under these rules, the ‘authority’ was bifurcated between chairman Ogra and DG oil.

Section 44(3) (a & b) of Ogra Ordinance provided for change of ‘authority’ to Ogra in respect of these rules while section 44(3) (c) provided that these rules shall stand repealed to the extent that any rules are promulgated pursuant to Ogra Rules 2002.

Later, Ogra’s Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules 2016 were promulgated in January 2016 but while framing their rules relating to oil regulatory functions, Ogra covered only those functions which were under its exclusive authority.

In view of the repeal clauses of Ogra Ordinance 2002, the Law Division gave its legal advice on the fate of Pakistan Petroleum (Refining, Blending and Marketing) Rules 1971 related to functions under exclusive authority of DG oil. The Law Division said that in Petroleum (Blending, Refining and Marketing) Rules 1971, the expression ‘authority’ had been changed and meant Ogra.

“Accordingly, the bifurcation of authority through SRO 236 of Mar 13, 2006 had no legal effect after the promulgation of Pakistan Oil (Refining, Blending, Transportation, Storage and Marketing) Rules 2016 and thus Pakistan Petroleum (refining, blending and marketing) rules 1971 now stand repealed”.

Consequently, in the wake of promulgation of Ogra’s Pakistan Oil Rules 2016 and legal opinion of the Law Division, Ogra is now in the process of undertaking remainder of the regulatory functions out of the repealed rules which were under the authority of DG oil.

Simultaneously, the Petroleum Division is framing a fresh set of rules to cover its policy and non-regulatory functions relating to downstream oil sector in the country. These would mostly give powers to DG oil for allocation of crude oil quantities to refineries, approval of specifications of petroleum products for both locally-produced and imported from abroad, specifications of finished lubricants, specifying minimum stocks of crude oil by refineries and petroleum products by oil marketing companies, export of surplus naphtha, crude oil and condensates etc.

Published in Dawn, May 9th, 2020