The federal government has instructed the Petroleum Division to draft a policy proposal aimed at amending the OGRA Ordinance 2002, which would grant the regulatory authority the power to determine and officially announce gas prices in the future.
Under the proposed changes, OGRA would be responsible for setting gas prices after consulting with stakeholders, and an appeals process would be established for parties seeking a review of the prices set.
The Petroleum Division will be tasked with presenting a policy proposal to the Cabinet Division, following standard procedures.
This development was discussed during the Economic Coordination Committee (ECC) meeting on October 23, 2023, and later received formal approval from the Federal Cabinet, as reported by BR, citing sources within the Petroleum Division.
Additionally, the ECC has directed that revenue from fixed charges should be categorized as ‘non-operating’ income, which would assist Sui Companies in addressing socio-economic challenges, particularly in Balochistan, and the reallocation of RLNG resources for domestic use in the North.
The Petroleum Division is actively working with OGRA and the Government of Balochistan to address revenue losses of the Sui Southern Gas Company Limited (SSGC) in Balochistan and is expected to propose recommendations to the ECC.
In an effort to maintain transparency, the ECC has instructed the Minister for Energy (Power and Petroleum) to convene a meeting with representatives from all provinces to discuss the proposed tariff increase and develop a comprehensive communication strategy.
It is important to note that under existing regulations, the Federal Government is required to advise OGRA on gas price revisions within 40 days.
However, this timeframe has already lapsed, prompting the consideration to empower OGRA to independently set gas prices in line with international best practices, reducing government involvement in pricing matters and addressing past delays in price adjustments.
According to a report by Profit, the caretaker government on October 30 approved an increase in natural gas prices for different categories of consumers, effective from November 1, 2023.
The decision was made after the Federal Cabinet and the ECC reconsidered the summary submitted by the Petroleum Division, which followed the advice of the OGRA.
Defending its decision, the government said that the increase in gas prices was necessary to promote the efficient use of the scarce commodity, ensure the sustainability and affordability of the supply chain, and avoid further accumulation of circular debt.
The government also cited the challenges of dwindling natural gas reserves, devaluation of rupee, inflation, and imported liquefied natural gas (LNG) as factors that increased the cost of gas.
UGC NET 2023 Correction