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Drastic changes in Ogra structure, powers planned

January 22, 2013

— File Photo

ISLAMABAD: Amid controversies over the build-up of Rs11 billion gas theft and system losses in consumer-end tariff and liquefied natural gas (LNG) imports, the government has decided in principle to drastically change the structure and powers of the Oil and Gas Regulatory Authority (Ogra) and remove petroleum secretary Dr Waqar Masood Khan.

A senior official told Dawn on Monday that a bill seeking amendment to the Ogra Ordinance 2002 had been sent to the federal cabinet for approval.

The bill expected to be taken up by the cabinet on Wednesday seeks to make the independent regulator a subservient institution of the government.

Authentic sources confirmed that the government had also accepted a proposal of Prime Minister’s Adviser on Petroleum and Natural Resources Dr Asim Hussain to replace Dr Masood with Additional Secretary Abid Saeed who was recently promoted to grade-22.

The sources said the adviser and Dr Masood were finding it difficult to go along on some major policy issues. The two had divergent views on curtailing the powers of Ogra and making changes in the LNG import process.

A copy of the proposed amendment “Oil and Gas Regulatory Authority Ordinance (Amendment) Act” available with Dawn suggests that composition of Ogra will be expanded from three to five members, excluding its chairman, to involve more professionals in the decision-making process. It seeks to have a chairman and five members — oil, gas, finance, liquefied gases and law.

At present, Ogra comprises a chairman and three members — oil, gas and finance.

The qualification for the post of Ogra chairman is also being changed by replacing experience in petroleum technology with 10-year experience in the energy sector.

The most important of all, the amendment seeks to replace “policy guidelines” with “directives of the federal government” in determination of gas tariff. This stems from resistance shown by Ogra to accept policy guidelines on gas tariff to include gas losses in areas affected by law and order and theft by non-consumers in addition to normal unaccounted for gas (UFG) losses following an order of the Supreme Court barring Ogra from accepting policy guidelines of the government or petroleum ministry inconsistent with the Ogra Ordinance to protect consumers’ interest.

An official explained that the word “directive” had a binding meaning for Ogra to implement it like a subordinate institution instead of “policy guideline” which was advisory in nature for an independent regulator to apply its own judicial and fair view of a principle.

“This changes the status of a regulator from being a quasi judicial forum to a subservient department of the petroleum ministry and hence contradictory to the spirit of regulatory framework,” the official said.

Another amendment seeks to empower the prime minister to appoint a member of Ogra for an interim period on an ad hoc basis without following the mandatory selection process through open merit under a pre-defined criterion. The new clause says that when a member is unable to perform his duty for reasons of leave or otherwise, the prime minister on the recommendation of an unspecified committee shall appoint a member for such period of absence.

This stems from the fact that two members of Ogra have become ineffective following a Supreme Court judgment requiring the National Accountability Bureau (NAB) to hold investigation into misappropriation of Ogra funds, recruitments and fixing of gas prices favouring stockbrokers. One of them has been described by the cabinet division as absconder without leave and has been found living in Switzerland to avoid the NAB investigation. The other has been stopped from performing duty because of the investigation.

The amendment bill also seeks to define the qualification of two additional members — law and liquefied gases — to deal with matters relating to mixing of LNG and liquefied petroleum gas (LPG) in natural gas and onward sale to consumers.

The member liquefied gases is required to have an appropriate degree in the relevant field and should be eminent, professional of known integrity and competent with 20 years of experience in the petroleum sector.

The member law is required to have an appropriate degree in the relevant field and should be eminent, professional of known integrity and competent with a minimum experience of 20 years in law, including at least five years in the energy sector.