The Economic Co-ordination Committee (ECC) of the Cabinet is scheduled to meet on Tuesday and is expected to grant 40 percent right of inspecting CNG installations to the Hydrocarbon Development Institute of Pakistan (HDIP), Business Recorder has learnt.
HDIP has been denied the right of inspecting CNG stations despite necessary expertise while Ogra, which lacks technical expertise, is empowered to inspect CNG installations by outsourcing to private sector companies at a cost of Rs 6 to 7 million per month. Petroleum Ministry has moved a summary to the ECC, recommending to divide inspection work on 60:40 basis between Oil and Gas Regulatory Authority (Ogra) and HDIP respectively. Ogra stopped outsourcing CNG inspection task to HDIP in October 2009.
Sources said that Ogra was willing to grant 20 percent CNG inspection rights to HDIP but Petroleum Minister Naveed Qamar intervened and the Petroleum Ministry moved a summary recommending 40 percent inspection rights to HDIP.
HDIP has recommended doing away with the role of private companies in inspection of CNG installations entirely. The regulatory, technical and safety inspection is essentially a job for public sector agencies like HDIP, but the ECC in 2006 also allowed private sector entry into the field.
Accordingly, Ogra inducted two private companies for this activity and divided the inspection work on 60:40 basis between HDIP and private companies, which reduced HDIP''s revenue stream proportionately. Sources said that Ogra had prescribed an agreement, to be signed by Ogra and HDIP, which was to place HDIP on the same pedestal as private companies.
The agreement had provisions for (i) Performance guarantee of Rs 1 million from a scheduled bank (Clause 8); (ii) only two years contract, extendable for another two years entirely at the discretion of Ogra (Clause 3); (iii) discretionary powers to Ogra to terminate agreement any time during the subsistence of the agreement without assigning any reason (Clause 12); and (iv) power to Ogra to interfere in assignment of personnel by HDIP (Clause 9).
Analysts noted that these provisions were highly asymmetric for a public sector organisation like HDIP that had been established by an Act of Parliament for the specific purpose, inter alia, to conduct inspection of CNG industry, testing, equipment approval, technical advice, etc.
The agreement was considered by the HDIP Board on October 3, 2009, and was not endorsed. The HDIP had introduced CNG as motor fuel in Pakistan and developed high competence in CNG technology with nation-wide infrastructure for the development, safety and technical inspections of CNG industry in accordance with rules and regulations. The HDIP has been performing the functions of Third-Party Inspectors (TPI) for the CNG Industry Regulator, ie, initially for the Ministry of P&NR and then for Ogra.
Central Chairman of All Pakistan CNG Association, Ghyas Paracha, alleged that Ogra had stopped assigning the task of CNG installation inspection to HDIP subsequent to receiving complaints against its officials. He said that CNG station owners had approached HDIP to address their concerns against HDIP officials but no action was taken.
"CNG stations owners then approached Ogra to take action and HDIP was stopped from inspecting CNG stations," he said, adding that Ogra assigned CNG inspection task to private companies, which also failed to provide quality service. He said that both private companies and HDIP should be engaged in a bid to give a choice to CNG industry to opt for one or the other.