The government has failed to establish the proposed Petroleum Regulatory Authority (PRA) - one of the obligations under 18th amendment- despite the demand from the provinces, which is adversely affecting the upstream petroleum sector, it was learnt reliably here.

The purpose of the establishment of the Petroleum Regulatory Authority was to regulate the upstream petroleum activities in the country. This is part of the petroleum rule 2013 and it is obligatory under 18th amendments but the government seems unwilling to set up the regulatory body as it still dillydallying its formation despite demand from the provinces of Sindh, KP and Balochistan, an official source told The Nation here Wednesday.

“I don’t have any hope for the establishment of the PRA as currently there is no headway regarding the establishment of the Authority,” the official stated. The ministry of petroleum and natural resources, Director General Petroleum Concessions (DGPC) and provinces have repeatedly asked the government to fund the Petroleum Regulatory Authority but the finance ministry has told clearly that they don’t have any money to allocate for the establishment of the authority. Though, after the establishments of the PRA, it will work in the building of DGPC but even then it needs about 300 million rupees to make the Authority operational, the official maintained.

It is pertinent to mention here that currently Oil and Gas Regulatory Authority (OGRA) is playing a regulator role for the downstream oil and gas sector while Directorate General of Petroleum Concessions of the Ministry of Petroleum & Natural Resources is functioning as the regulatory authority for all upstream exploration & production activities in the country. The provinces are not satisfied with its work, particularly after 18th amendment, and want an authoritative body like NEPRA to be established to regulate the upstream petroleum exploration and production.

The 18th Amendment guarantees a 50/50 split of shares in oil and gas resources to the federal and provincial governments, which also need an additional regulatory body to oversee the upstream petroleum activities.

The official said that so far about 47 petroleum exploration licenses have been issued and there is no authority to resolve the emerging issues in the upstream sector. For example, in the absence of PRA, if a license holder is not working properly in their allotted block there is no authority where the province can drag them for accountability. “It is not physical fighting so don’t expect that the provinces will take the license holder company to the criminal court or other judicial body, it is regulatory issue and you need a regulatory forum to resolve it,” the source maintained.

This delaying on the part of the government is hurting the investment in the sector as besides provinces the investors also afraid from investing in a regulation free market, the official remarked. Pakistan is currently spending billions of dollars on the import of oil and is facing severe gas shortage, which requires the immediate development of indigenous oil and gas sector but the absence of regulatory authority is affecting the pace of work on upstream petroleum sector, the official added.