ISLAMABAD - Rejecting the sole proprietorship of the federal government regarding proposed upstream regulatory authority, the provinces have demanded that Pakistan Petroleum Exploration and Production Regulatory Authority (PPEPRA) should be put under the control of Council of Common Interests (CCI), official source told The Nation.

The PPEPRA shall in the performance of its functions act independently provided that the Council of Common Interests may issue the policy guidelines as it may deem necessary, said Khyber Pakhtunkhwa Minister of Energy Atif Khan while commenting on the establishment of proposed PPEPRA during the fifth meeting of the Gas Sector Leadership Committee meeting held on Thursday.

The meeting was chaired by Prime Minister Shahid Khaqan Abbasi and was attended by Sindh Chief Minister Syed Murad Ali Shah, Balochistan Chief Minister Sardar Sanaullah Khan Zehri, Minister of State for Energy Jam Kamal Khan, Khyber Pakhtunkhwa Minister of Energy Atif Khan, Punjab Minister of Finance Dr Aysha Ghaus Pasha, OGRA Chairman Uzma Adil Khan and other senior officials. World Bank Pakistan Mission Leader Defne Gencer along with senior officials of the World Bank were also present.

The meeting discussed the gas sector reforms, including the unbundling of the gas utilities companies and draft proposal for the establishment of the PPEPRA. Discussing the reform process, the prime minister highlighted that the new policy, regulations and technical framework would be perfectly compliment with the constitutional provisions.

The prime minister assured the meeting that all constitutional issues pertaining to gas sector were being addressed at the level of CCI. He said that while the constitutional matters were being dealt at an appropriate level, the process of operational and tactical reforms should simultaneously be continued.

SSGC MD Khalid Rahman briefed the meeting on downstream and upstream gas sector reforms including Third Party Access (TPA), unbundling of transmission and distribution business, licensing and tariff methodology. The meeting was apprised that draft TPA rules have been submitted to Ogra and public comments are being invited. Network codes are in the final stages and SNGPL Board has approved processing of the appointment of transaction adviser. It was further briefed that licensing proposals were being considered by Ogra. Policy reforms regarding gas sector have already been referred by the CCI to IPCC for discussion and comments from Sindh and Khyber Pakhtunkhwa have been received.

The World Bank consultant briefed the meeting on recommendations regarding allocation of policy and regulatory rules, establishment of Directorate General of Exploration & Production in the Ministry of Energy and establishment of Pakistan Petroleum Exploration and Production Regulatory Authority. The meeting was also briefed on existing administrative capacity of the public gas sector organisations and proposals for enhancement of its efficiency.

The Sindh chief minister underscored the importance of fulfilling constitutional requirements for these reforms and proper sequencing of procedural and constitutional reforms. The Khyber Pakhtunkwa energy minister also seconded the view point of the Sindh. The meeting supported, in principle, to carry forward the reforms process and pledged to contribute towards providing a sustainable and efficient gas exploration, production and transmission and distribution system.

Rejecting the preamble of the proposed draft, the KP government presented its own preamble saying, “an Act to provide for the establishment of the PPEPRA, in light of the Article 172 of the Constitution of Pakistan which shall be the overriding instrument for the regulation and administration of the petroleum exploration, prospecting, development and production activities in Pakistan. It is expedient to establish an independent regulator, under the supervision of CCI as a quasi-judicial entity to carry out the regulation and administration of petroleum exploration, prospecting, development and production activities in Pakistan.”

Sindh and Khyber Pakhtunkhwa, while completely rejecting the composition of the authority given in Section 1,1a,1b,1c and 1d of the proposed PPEPRA with only the representation of the federal which includes a chairperson and four federal members, said “The composition of the authority shall ensure joint and equal representation of provinces. The authority shall comprise of a rotating chairperson and five members, one from the federal government and each from the provinces.” They further said, “The authority shall comprise of a chairperson to be appointed by the federal government and four members, one from each province, to be appointed by the federal government on the recommendations of the respective provincial governments.”

Similarly, section 4-2 says that the chairperson shall nominate the senior most member to be the acting chairperson to act during his/her absence. The clause was rejected by the Sindh government saying that both the provinces recommended that there shall be a vice-chairperson of the authority, appointed from amongst the members (representing provinces) for a period of one year.

Proposing modification to Section 2(i) of the proposed PPEPRA draft, both Sindh and KP recommended that the federal government shall appoint a chairperson or a member on the recommendation of respective province, as the case may be, within thirty (30) days of the date the position of chairperson or member has become vacant. Regarding section 20:2f, both the provinces recommended that “Administer bidding round in consultation with the federal government and respective provincial governments for the award of new exploration blocks in accordance with the Petroleum Rules.”

Showing objection to section 21:2 of the draft, the Sindh government said that after 18th Amendment and omission of Concurrent List including Entry 30, the role of the federal government through federal chief inspector of mines on matters related to labour and safety of mine including oil fields which in turn include gas field has ceased to exist. The subject now exclusively falls within the domain of the provincial governments which may exercise this function through respective provincial chief inspector of mines.