Under the Ogra Ordinance 2002, the federal government assigned to it functions for the regulation of activities relating to liquefied petroleum gas and compressed natural gas sectors. In theory, it should regulate oil and gas business in public interest in an autonomous and quasi-judicial fashion, independent of other branches or arms of the government. - File Photo.

The Oil and Gas Regulatory Authority was set up in 2002 to foster competition, increase private investment and ownership of the midstream and downstream petroleum industry.

It was mandated to protect the public interest while respecting individual rights and provide efficient regulations.

Under the Ogra Ordinance 2002, the federal government assigned to it functions for the regulation of activities relating to liquefied petroleum gas (LPG) and compressed natural gas (CNG) sectors.

In theory, it should regulate oil and gas business in public interest in an autonomous and quasi-judicial fashion, independent of other branches or arms of the government.

In recent months, however, the Ogra has become controversial. One of its members, having more than 30 years of experience in oil and gas sector, recently resigned and is now seeking investigations into violations of Public Procurement Regulatory Authority rules and the government's approved policy putting a ban on setting up of new CNG stations due to acute gas shortages.

In a letter to the prime minister, provincial governments, secretaries of petroleum and cabinet and director general of Inter Services Intelligence (ISI), the Ogra's former member (Oil) Dr Ilyas Fazil has sought investigations into three particular issues. An official at the petroleum ministry said the allegations by the former Ogra member could not be simply ignored but it was up to the cabinet division to decide.

He said the prime minister had imposed a ban on CNG stations in March, 2008, saying, “New CNG licences in the pipeline be held up. CNG connections should not be given except to those who have already imported CNG machines.” The directive said “No new provisional licence be issued which enables an investor to undertake construction, import machinery or apply for various NOCs etc.”

To set up a CNG station licence, the investor has to obtain various NOCs from the district authorities as well as a certificate from the Chief Inspector of Explosives for the site in question to ensure safety standards. A licence for a CNG Station, therefore, is site-specific.

Since the ban, a number of attempts were made by unscrupulous elements to bypass procedures to obtain licences despite the ban, especially by those whose provisional licences were issued prior to the ban but for some reason could not complete the required formalities for obtaining formal Ogra licence and then 'sell' it to a third party.

One novel way to bypass the ban was to request for change of site, under the same provisional licence. Since change of site meant a new site, and in turn meant a fresh licence, all these attempts were successfully thwarted by Ogra till January 2010, saying, change of site cannot be allowed under an existing provisional licence. On the same principle, Mr Fazil claimed the Ogra disallowed a change of site requested by MNA Mian Riaz Hussain Pirzada (for Chaudhry CNG Station, Hasilpur City, District Bahawalpur) on January 13, 2010.

However, a letter originating from within the Prime Minister's Secretariat on February 11, 2010, based on the request of the same MNA asked Ogra to “revisit its policy related to change of site”. As the secretariat had issued standing instructions to verify authenticity of PM's letters in case of doubt, two Ogra members sought clarification in the matter, after discussing it with the chairman.

Mr Fazil said the chairman Ogra 'illegally' ordered in May 2010 an inquiry for seeking clarification from the PM although the law did not allow the chairman or members to pass decisions against each other and any violation has to be proceeded against for misconduct by the Federal Public Service Commission.

On a complaint to the prime minister through the cabinet division, the two Ogra members requested proceedings against the chairman and a member. He said the secretary cabinet desired to resolve the matter without involving the prime minister.

In the meanwhile, he said the Ogra chairman allowed through his casting vote to allow change of site in violation of the March 2008 ban.

The former member (Oil) also alleged that Ogra, in spite of having a full-fledged legal department manned by full-time lawyers, has during the last 3-4 months, engaged outside counsels and, mostly from outside the panel of lawyers approved by the Authority. “This venture of patronising favourites and friends has cost the organisation almost Rs6 million in this short period, which is almost equal to the total amount spent on this account since Ogra's inception eight years ago.

In his letter to the prime minister, Mr Ilyas Fazil has also said that the cabinet division while seeking fresh applications for the appointment of member oil, has required under the Ogra Ordinance that “No person shall be appointed by the federal government as a member if he has any direct or indirect financial interest in or has any connection which might reasonably be viewed as giving rise to a conflict of interest with any person involved in any regulated activity in the oil and gas sector.”

This has been quoted from Sec 5 (2) of the Ogra Ordinance, which also states further that “No person appointed as Member shall, during his term in office, have or maintain any direct contact or indirect financial interest in any person involved in any regulated activity”.

He said that under the ordinance, this clause was also applicable to the position of all members including chairman but the cabinet division's quest for the position of chairman, Ogra, last year did not adhere to this legal requirement. He alleged that the “sitting chairman is a political appointee who was a few years back a registrar within Ogra and whose academic qualifications have been challenged in the court of law”.

Chairman Ogra Tauqir Sadiq said he decided the matter of change of site CNG stations on merit because the rules also allowed change of site in case it was desired by the government. He agreed that many provincial CNG station licence holders were selling their licences in the market but Ogra had the powers to decide the matter on a case- to-case basis. He said he had secured the cheapest rates in hiring the Ogra building on rent.