Ease-of-doing-business strategy activated in petroleum sector

ISLAMABAD: The Petroleum Division (PD) of Energy Ministry has operationalised the ease-of-doing-business strategy, introduced in line with the prime minister’s vision, to remove red- tapes in getting approval for investment and advancements in different fields of the hydrocarbons.

“This sector has 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), which needs reformation,” a senior official privy to petroleum sector developments told APP.

The Pakistan Tehreek-e-Insaf government was committed to completely overhaul this sector, he added.

After the strategy introduction, he said, as many as five private sector companies were planning to set up LNG terminals, having capacity to re-gasify 500-700 million cubic feet of gas each per day.

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The official said the government’s footprint in the coming years in the energy as well as other sectors was going to shrink. “It is not only the government’s stated policy but fervent desire and intention.”

He said the government was going to do major restructuring on the pipelines side by converting them into ‘open access pipes’ and during the next two years, “We intend to separate transmission from distribution and open up the sector for use through private supplies and open access. Let the private sector compete with the government distribution companies and let them run faster and become more efficient.”

Unfortunately, he said, the previous regimes took short term initiatives and introduced new laws and regulations to resolve the confronted problems temporarily, which in the long-run created hurdles in smooth petroleum sector activities.

He said the Petroleum Division, as per the vision of Prime Minister, had devised a prudent strategy, which would eventually attract local and foreign investments. “Increased investment will ultimately create more and more job opportunities.”

He said the strategy was aimed at encouraging new players in the petroleum sector that would oust inefficient from the industry. “An environment of competition will be ensured, ending the monopoly of individuals.”

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. There will be a certain time-limit for approval at each step, and if no response was given, the case would be moved to the next stage automatically, he added.

Besides, he said, there were some small and old fields where E&P companies had stopped extracting natural gas due to high cost, adding now the government had planned to give incentives in this area so that domestic production of the gas could be increased to some extent instead of importing LNG at higher rate.

The official said a draft had been prepared to separate functions of policymaking, regulation and administration of the E&P sector contracts to ensure more efficient working.

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.”

In the refining and marketing sector, he said there were some 17-25 steps to set up a petrol pump station. Out of which, he said, only six to seven steps including approval from Environment Protection Agency, Oil and Gas Regulatory Authority and Explosive Department concerned were necessary for establishing a petrol station.

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. The given concession would also be applicable for new deep conversion oil refineries, he added.

He said LPG quota system was being abolished, following which Oil and Gas Development Company and Pakistan Petroleum Limited would hold open auction under which the commodity supply would be ensured at prescribed rate throughout a year.

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