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Oil and Gas Regulatory Authority (Ogra) took notice of a Business Recorder exclusive and cancelled all Liquefied Petroleum Gas (LPG) licences issued to dealers in violation of the rules and regulations as clearly laid down in the LPG policy. The decision was reportedly taken during a meeting chaired by the Ogra Chairman and attended by relevant officials as well as the major stakeholders represented by Irfan Khokhar, Chairman of All Pakistan LPG Distribution Association. This decision must be welcomed.
While the Ministry of Petroleum and Natural Resources placed a complete ban on the issuance of fresh licences for CNG stations, as well as a complete ban on the grant of new domestic connections, Ogra continued to violate this policy on orders of the then PM, Yousuf Raza Gilani, who wanted to obtain political support from powerful members of the National Assembly through his appointee, the then Ogra chairman, Tauqir Sadiq. This corrupt practice was the chief culprit behind the shortage of gas supply for electricity, urea fertilizer, textile mills as well as other businesses. The loss to the country is said to be around two percent per year in terms of economic growth. To complicate this issue, keeping the price of domestic gas much below furnace oil has resulted in creating more economic chaos. Ministry of Petroleum's attempt to collect the difference as a gas development surcharge to get funds to have the infrastructure for gas imports is held up by the courts. This confusing policy implementation and Ogra's failure to act as proper regulator have resulted in the percentage supply to domestic consumers and CNG sub-sector to disturbingly rise from 25 percent to 75 percent. What a waste of precious but fast-depleting natural resource!
Expanding the SNGPL and SSGC networks has also resulted in raising the incidence of notorious unaccounted for gas. Ogra has disallowed the losses to the companies for this additional loss. Ogra is right. But then it should have insisted an absorption of this cost from the federal budget instead of penalising the shareholders. Failure of Ogra to act as an efficient regulator is quite apparent. Regulator needs to develop the sector it regulates; and under no circumstance must it cause any harm to it - willingly or unwillingly.
In this context, it is also relevant to note that the meeting chaired by Ogra chairman also took note of overcharging by LPG marketing companies. This too is a serious problem in this country and even though it is not unique to the fuel sector, even the retail sector for consumer items charges what it reckons each individual customer can bear, yet one has to acknowledge that it is the responsibility of the regulator namely Ogra to have monitored and ensured that not only was there no violation of the policy of not granting licences as a ban on new connections was in place but also not allowing marketing companies to overcharge. Failure to do so is a reflection of the severely flawed policies of appointments by the former government and Tauqir Sadiq's appointment in particular that continues to plague the sector.
It is regulator's responsibility therefore to ensure a level playing field to all sub-sectors operating within its area of responsibility. But to achieve this would require a senior appointment that is made on the basis of merit and experience. Pakistan Telecommunication Authority is an example where management succeeded in reducing call rates abroad to the lowest levels in the region in spite of the prevalent high inflation.
It is hoped that in case there is no one in this country who has the qualifications or experience to head Ogra then the government of the day seeks to recruit internationally. The cost of incompetence and corruption of those appointed during the past five years has been too high and is currently being paid by the common man in terms of power outages, shortages in fuel to cook, and rising inflation.

Copyright Business Recorder, 2013

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