Policymaking, regulation of E&P contracts being separated: Nadeem Babar

ISLAMABAD: Special Assistant to Prime Minister (SAPM) on Petroleum Nadeem Babar Monday said a draft had been prepared to separate  functions of policymaking, regulation  and administration of the Exploration and Production (E&P) sector contracts.

Addressing the launching ceremony of Pakistan Energy Outlook-2019 here, he  said this initiative would help streamline matters related to the E&P sector and  attract further investment.

He said it was not fair that the policymaking, regulation and administration of the contracts were being looked after in one office,  the Director General Petroleum Concessions. “You cannot be judge and jury and hangman on the prosecution at  the same time. We have to separate them.”

Accordingly, he said, a draft had been prepared which would be sent to the  quarters concerned in the upcoming months, as the existing mechanism had  created numerous ambiguities and problems in award of the E&P contracts.

Nadeem Babar said the petroleum sector had been divided into five key areas  like oil and gas Exploration and Production (E&P), refining and marketing,  pipelines and gas distribution, Liquefied Petroleum Gas (LPG) and Liquefied  Natural Gas (LNG).

He said some policy changes had been made to facilitate new companies  in the E&P sector, abolishing 10 unnecessary steps, out of 24-30, required  for getting approval to start drilling activities in potential areas.

“We want to move away from approval based concept to a complaint based concept,” he said, hoping that in the coming months the country would have  better integrated energy plan.

He advocated opening up market for private sector, extending them maximum facilities so that they could operate comfortably and play role in meeting the  country’s energy requirements.

The SAPM said it was strange that private sector could not sell oil, gas and electricity to consumers directly, adding there must be an environment of competitiveness, which would give benefit to both companies and consumers. Besides, it would give a boost to business activities in the country, he added.

In the public sector, he said entities were running in financial losses as despite knowing the cost of providing service, they never charged full cost of the service. They were used to give heavy subsidies to consumers, which multiplied their  financial woes and made their operational viability difficult.

He said the solution was that the cost of providing a service should be brought down and actual recovery should be made. “If you do not to do that and continue  to rely on public exchequer, this is the most inefficient use of subsidies.”

Nadeem Babar said the root-cause of a problem should be found, instead of addressing it through regulation, adding “We have so much room to fix these  things and frankly, we can change the direction of this economy very quickly,  for which realization is a must.”

The government, he said, had decided to encourage private sector in the  Liquefied Natural Gas sector.

He said only 27-30 percent population had the access to the piped gas and  almost 70 percent were deprived of this facility, adding until  more domestic  gas was produced, expansion in gas infrastructure was not viable.

He said three oil refineries, out of five existing facilities, were inefficient,  and the government had announced a 10-year tax exemption for them to  increase their capacity.

Under the strategy, the SAPM said, new players would come in the  petroleum sector and inefficient would have to quit. “An environment of  competition will be ensured.”