OICCI recommends robust policy measures for long-term energy sector reform

Chamber suggests exploration and development of unconventional hydrocarbon resources

ISLAMABAD: The Overseas Investors Chamber of Commerce and Industry (OICCI) has proposed liberalisation and transformation of the monopolistic power market into a multi buyer-seller marketplace considering that the exclusivity to sell and distribute for DISCO’s is scheduled to terminate in 2023.

This will create options for power purchasers as well as producers to enter bilateral deals i.e., energy sale via B2B mode through a fair and transparent wheeling regime. 

In this regard, OICCI, while unveiling the salient features of its ‘OICCI Energy Recommendations 2021’ at a media launch said that recommendations focuse on implementing an efficient and cost-effective energy supply chain, while increasing the share of green energy sources to meet the environment and sustainability milestones. 

The detailed recommendations have recently been presented to the Ministry of Energy and other relevant stakeholders.

Highlighting the key elements, OICCI Vice-President, Ghias Khan, emphasised that the proposed recommendations are the collective view of leading energy sector professionals associated with OICCI members. 

“We are confident that the proposed recommendations will be instrumental in GOP’s continued endeavor towards reforming the overall energy sector and bringing it at par with international standards. These steps shall also be indispensable in meeting the growing energy demand in the country at an optimal cost, making us internationally competitive for export and primed for the economic growth of the country”, he said.

It has been suggested that the downstream policy framework and structure should be revised to exhaustively cover all aspects of governance including, but not limited to, reviewing the price structure by moving towards price deregulation, supply chain management focusing on the issues with logistics infrastructure including the existing port constraint due to insufficient unloading capacity, long waiting time, vessel planning, import dependency, and need for building strategic stocks by increasing storage capacity. 

On a priority basis, there should be a mutually agreed mechanism for periodic revisions in the downstream price structure, more specifically margins, to ensure it remains reflective of actual costs to the oil marketing companies, followed by the complete deregulation of MS and HSD that constitute about 80 per cent of total petroleum products consumption, the report states. 

The recommendations also voiced favour for the development of the LNG sector by fast tracking all projects that will create additional pipeline capacity for new LNG terminal developers and/or existing terminals looking to expand.

OICCI appreciated the government for issuing licenses and approvals for two new terminal developers in September last year, but asked the authorities to facilitate existing customers at LNG terminals by signing the Terminal Coordination Agreement (TCA) to address shortages that are likely to occur till the time the new terminals come online. 

Furthermore, the recommendations highlighted the urgency of revamping the bidding process for granting exploration licenses and encouraging exploration and development of unconventional hydrocarbon resources.

OICCI members lamented that interest by both private domestic and foreign E&P companies has declined due to low potential of the offered blocks.

“The government should assign higher priority to the local E&P industry to keep the energy import bill low, as locally produced primary energy is far more economical than imported energy,” they said, adding that this could be achieved if the government frequently offers new exploration concessions and open acreages for bidding in addition to making the regulatory management of existing concessions efficient.  




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Ghulam Abbas
Ghulam Abbas
The writer is a member of the staff at the Islamabad Bureau. He can be reached at [email protected]
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