ISLAMABAD, March 11: In its maiden regulatory function, the natural gas regulatory authority (NGRA) has directed all the gas companies to file licence applications before March 26, 2002.
“We have written to the (gas) companies to file (licence) applications. They are required to approach the regulator within 30 days of the issuance of licensing rules (2002) to get the licence,” chairman of NGRA Munir Ahmad told Dawn on Monday.
The statutory notification “Natural Gas Regulatory Authority (Licensing) Rules, 2002” was published in the gazette of Pakistan on February 26 and the companies are currently in the process of completing legal requirements, he said.
A total of five gas companies primarily in the business of direct sale of natural gas to consumers are required to get transmission and distribution licences, Mr Munir said. He said that it may take six months to complete the process but the companies would be deemed to be licencee and in the legal business the day they file licence application.
As such two gas utilities — Sui Southern Gas Company Limited (SSGCL) and Sui Northern Gas Pipelines Limited (SNGPL) — and three producers Pakistan Petroleum Limited (PPL), Mari Gas Company Limited (MGCL) and Tullow Petroleum would get transmission and distribution licences. Other gas producers do not fall under NGRA’s jurisdiction because wellhead prices are already fixed under the 1997 petroleum policy.
With this, Pakistan’s first ever natural gas regulator — NGRA— becomes operational through an ordinance promulgated in early 2000. The NGRA is required under the law to grant licence to an applicant within six months from the date of filing an application, Munir said.
But as the NGRA just goes formally into operation, the federal cabinet approved last week another ordinance to set up Oil and Gas Regulatory Authority (OGRA).
As a result, the NGRA would be renamed as OGRA with the additional role of regulating petroleum products, pipelines, and oil companies including liquefied petroleum gas (LPG) and lubricants business.
“We plan to induct a member, oil, soon after the promulgation of OGRA ordinance and then hire a consultant to prepare oil sector rules,” said Munir Ahmad. He said that in next six months to one year period, OGRA would be fully functional.
The gas companies would have to file licence applications along with fee at the rate of Rs0.75 million for transmission licence, Rs0.5 million for distribution and sale each, Rs1 million each for an integrated licence (transmission plus distribution) and project licence each.
The licencees would be required to pay an annual renewal fee of 0.5 per cent of the total turn over generated from the licensed/regulated activity in the most recent financial year.
Under the rules, any company incorporated inside or outside Pakistan may submit an application to the NGRA for obtaining a licence to undertake a regulated activity, by filing it with the registrar along with fees the regulator may from time to time determine.
Munir Ahmad agreed that most of the prices and investment side issues already stand defined under the petroleum policy but stressed that companies would have no blanket authority to approve project costs in their board of directors meetings once they become legitimate licencees under the NGRA ordinance. Rather they would have to justify the costs to claim return on investment from consumers.
He also agreed that NGRA would be performing more like an auditor to protect interests of the consumers, the investor and the nation as a whole. He said that as chairman NGRA he did not believe in determining system losses in percentage but the volume.
He explained that 10 per cent line loss in the sale of Rs1 billion worth of gas translated into Rs100 million, which was a big amount. The NGRA would make the companies agree to system loss standards where the quantum of overall loss is reduced say to Rs50 million.
He said that NGRA would encourage the general public through an open door policy to verify facts and figures from NGRA files and raise objections on various issues for debate and correction.
