ISLAMABAD: The Ministry of Law and Justice has issued a statutory regulator order (SRO) empowering the Oil and Gas Regulatory Authority (Ogra) to set the sale price of regasified liquefied natural gas (RLNG) to end-consumers — power, fertiliser and CNG.

A senior Ogra official told Dawn that the law ministry had issued an SRO on Sept 30, 2015 that would now legally enable the regulator to determine RLNG price, the last hitch towards signing of a long-term LNG supply agreement with Qatar.

The official said the Ministry of Petroleum and Natural Resources had apparently misreported before a parliamentary committee and in the media that Ogra was delaying the RLNG pricing. He said the law ministry’s SRO reached Ogra on Thursday and would like to finalise its price determination for future LNG shipments by the next week.

He said the petroleum sector stakeholders submitted final case with Ogra on July 28 for RLNG price. The regulator required a list of documentation from the petroleum ministry, SNGPL and SSGCL and PSO. Most of the evidence was provided to Ogra except for legal coverage for import of first four cargoes of LNG that were not imported under procurement rules.

Ogra was told that these cargoes were brought with the consent of the federal government, but valid documentation of such consent was not provided. Under rules and regulations, the ministry concerned is required to move a case to the Public Procurement Regulatory Authority (PPRA) giving reasons for bidding exemption in case of emergency or any other national interest.

The PPRA’s board led by federal secretary of the finance ministry is then required to examine this emergency or national interest and move a summary to the prime minister for exemption of bidding. This was not the case in the matter of first few LNG imports.

The senior Ogra official said that even the petroleum minister had not given approval for the exemption to import LNG without bidding and some quarters wanted the Ogra to take the entire brunt in violation of law to give legal cover to LNG imports without bidding.

Finally, it dawned upon all the stakeholders that despite approvals by the Economic Coordination Committee of the cabinet for various elements of the RLNG pricing, there was no formal notification issued by any competent forum under which Ogra could set LNG pricing. As a consequence, the law ministry issued an SRO on Sept 30 under which Ogra can set RLNG prices.

However, the question of first four cargoes would still remain under clouds because it has to be separately approved by the prime minister if the petroleum minister had consented first four cargoes without bidding.

Earlier, Ogra expressed serious concerns over past six months of LNG business and asked the three key oil and gas companies to secure legal cover from the government for provisional pricing of the new commodity to settle the lingering issue before winter when gas shortage would go up.

It had put on record that pricing, sale and invoicing of LNG business in its existing form and documentation was not a legal business in the eyes of the law. Therefore, the regulator could not legalise it or approve its pricing.

The regulator said the LNG could not be compared with other petroleum products which had an established and approved mechanism being practised since decades.

It said the oil pricing was almost completely deregulated, its rates verification mechanism had been provided by the federal government while involvement of the Oil Companies Advisory Council (OCAC) and other oil marketing companies (OMCs) ensured its transparency and long-term contracts at government level were already available on record but such transparency was not available in case of LNG imports so far.

Even since the first LNG cargo arrived at Port Qasim on March 27, LNG is being supplied to fertiliser plants — mostly Pak-Arab Fertilisers Ltd — and CNG stations on provisional orders of the petroleum ministry.

Published in Dawn October 3rd, 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play