Gas transmission and distribution: Private sector’s role proposed
ISLAMABAD, Dec 24: As gas scarcity spins out of control, the government has decided in principle to open up the transmission and distribution system to the private sector and change the pricing mechanism from biannual to quarterly and subsequently a monthly basis to facilitate the sale of imported gases.
To achieve the objective, the government is working on drastic changes to the Oil and Gas Regulatory Authority (Ogra) Ordinance and related rules, an official told Dawn on Monday. All the official stakeholders, including the ministry of petroleum, gas companies and Ogra, have been asked to submit proposals by Jan 4.
The decision was taken at a meeting presided over by the Prime Minister’s Adviser on Petroleum and Natural Resources, Dr Asim Hussain, and attended by the heads of all gas companies, Ogra and other stakeholders last weekend.
The plan will be submitted to the federal cabinet after working out the legal and operational modalities.
According to the minutes of the meeting, the government plans to create a number of ‘cost centres’ in the Sui Northern Gas Pipelines (SNGPL) and Sui Southern Gas Company (SSGCL) to segregate the transmission system from the distribution system.
The centres will be separately dealt with for calculation of unaccounted-for gas (UFG) losses and provide various distribution segments to private companies.
The Ogra Ordinance and rules were being reviewed for making amendments enabling the government to have quarterly and monthly review of prices for imported gases to overcome shortage, a letter written by Dr Asim to the stakeholders said.
An official explained that the current six-monthly gas pricing mechanism took into account the domestic gas production only, while the rates for imported gas, particularly liquefied natural gas (LNG), needed to be adjusted quite often in view of the prices in the international market. The rules and laws will be changed to enable the regulator to pass on the impact of changing international LNG prices to consumers at shorter intervals, starting from quarterly readjustment and followed by monthly changes.
The oil marketing companies have also been asked to make available space and existing stations for liquefied petroleum gas (LPG) fuel stations and look into any problem concerned with implementation of rules for its widespread sale for vehicles to replace compressed natural gas (CNG).
Officials said the government would consider wide-ranging amendments to the ordinance keeping in view shortcomings noted by the government, courts and consumers.