1. “ROLE OF OIL AND GAS REGULATORY AUTHORITY (OGRA)”

2. Way Forward Petroleum Sector Regulations Profile of the Authority
CONTENTS
Petroleum Sector Regulations
Profile of the Authority
Powers and Functions
Legal Framework
Licences Granted
Tariff Mechanism
Tariff Structure
Petroleum Products Prices
LPG Prices
Redressal of Complaints
Way Forward

3. PETROLEUM SECTOR REGULATIONS
Establishment of Natural Gas Regulatory Authority (NGRA) in 2000 to regulate natural gas pipelines, transmission, distribution and sales thereof
Establishment of Oil & Gas Regulatory Authority (OGRA) in 2002 to regulate midstream and downstream oil and gas sector. NGRA subsumed in OGRA
The Authority is independent in the performance of its functions and has exclusive powers to deal with the matters assigned in the Ordinance
Government may issue policy guidelines not inconsistent with the Ordinance and the Authority is obligated to comply with such policy guidelines

4. PROFILE OF THE AUTHORITY
OGRA of following members appointed by the Federal Government through an open competitive process as under:
Mr. Munir Ahmad, Chairman
Mr. Rashid Farooq, Member (Oil)
Mr. M. H. Asif, Member (Finance)
Member (Gas), Vacant (since )
Staff Strength: 175 ( 84 executives and 91 support staff)
OGRA regulates 79% of the energy sector
Objectives:-
Foster competition
Increase private investment and ownership in the midstream and downstream petroleum industry
Protect the public interest while respecting individual rights
Provide effective and efficient regulation

5. POWERS & FUNCTIONS - Main functions of the Authority are:
Grant of licences for regulated activities namely:
Natural Gas
Pipelines, transmission, distribution, sale and storage
(ii) CNG, LPG and LNG
Installations, production, storage, transportation and marketing
(iii) Oil
Pipelines, refineries, storages, lube oil blending plants and marketing of petroleum products

6. POWERS & FUNCTIONS
Determination of revenue requirement and prescribed prices of natural gas utilities : notification of prescribed and consumers’ sale prices
Determination & notification of consumers’ prices of petroleum products in consultation with the Federal Government
Enforcement of standards and specifications for refined oil products as notified by the Federal Government
Enforcement of technical standards (best international practices) in all the regulated activities
Resolution of public complaints and disputes against licensees and disputes between licensees

7. LEGAL FRAMEWORK
Established comprehensive legal framework through notification of various licencing rules, natural gas tariff rules, complaints resolution procedure regulations, performance & service standards of gas companies
Work on formulation of various rules/regulations i.e. LNG Rules, Gas Theft Rules, Promotion of Fair Competition Rules, Enforcement Rules, Revised CNG Rules, Revised LPG Rules and Performance & Service Standards for oil activities in progress

8. LICENCES GRANTED CNG : Vehicles converted Up to 21.06.2007
Provisional licences for construction of CNG stations :
5394
Marketing licences for operation of CNG stations
1422
Vehicles converted
1.2 million
LPG
Provisional licences for construction of LPG storage & filling facilities 63
Marketing licences for operation of LPG storage & filling facilities 58
Production Licences
OIL
Lube oil blending / reclamation plants
Provisional licence for construction of
oil refinery at Port Qasim 14 06 01

9. TARIFF MECHANISM
Gas utilities are entitled to fixed rate of return (SNGPL 17.5% and SSGCL 17%) on operating assets (ROA) before tax and financial charges
Prudent, cost effective and economically efficient capital expenditure is allowed in the asset base for rate of return purposes
Prudent operating and maintenance costs are accepted in the determination of revenue requirement
Incentives for efficiency
UFG / Line Losses Benchmarks (entire saving kept by Utility)
Human Resource (HR) Cost Benchmark (Equal sharing of savings)

10. TARIFF MECHANISM
The process is transparent and ensures effective participation of consumers and general public
Admission of Petition
Public Notice
Public Comments / Interventions
Public Hearing
Final Scrutiny
Authority’s Decision
Federal Government Advice
Notification of Gas Prices

11. TARIFF MECHANISM UFG / Line Losses Benchmarks
EFFICIENCY INCENTIVES FOR GAS COMPANIES
UFG / Line Losses Benchmarks
SNGPL
Actual
8.87%
7.98%
8.19%
6.75%
6.86%
6.61%
Allowed
* 6.50%
* 6.00%
*5.85%
SSGCL
8.36%
7.60%
7.57%
7.09%
7.48%
6.65%
* Benchmark set by OGRA
Recurring Saving Rs.2.5 billion / annum

12. TARIFF MECHANISM EFFICIENCY INCENTIVES FOR GAS COMPANIES
Human Resource (HR) Cost Benchmarks
Actual HR cost for FY used as base year and indexed in subsequent years on the following basis:
50% of notified consumer price index
60% of incremental number of gas consumers
20% of incremental transmission & distribution network
20% of the incremental sales volume
Sharing of Savings or Excess in:
a) UFG: Entirely by gas companies
b) HR Cost: Equally between gas companies and consumers

13. TARIFF STRUCTURE Particulars 2004-05 Actual 2005-06 Actual
SUI NORTHERN GAS PIPELINES LIMITED
Rs./MMBTU
Particulars
Actual
Actual
Estimated
Estimated
Volume (BBTU)
505,543
539,099
545,289
559,003
Cost of gas
140.82
170.67
180.47
186.24
T & D cost and depreciation
17.59
18.51
22.16
23.22
Return on assets
10.70
10.66
11.11
11.56
Other income
(4.18)
(3.55)
(3.81)
(4.09)
Average Prescribed Price
(Revenue Requirements)
164.93
196.35
209.93
216.93
Average Sale Price
167.56
200.14
229.25
220.63
Gas Dev. Surcharge
2.64
3.79
19.32
3.70

14. TARIFF STRUCTURE (FY 2007-08)
Sector
Average cost of supply
Sale Price
(Subsidy)/GDS
1- Domestic
Rs./MMBTU
First slab
214.99
78.38
(136.61)
Second slab
82.07
(132.92)
Third slab
149.40
(65.59)
Fourth slab
239.10
24.11
Fifth slab
310.92
95.93
2-Fertilizer
A-Old Plants
- Feedstock
- Fuel
91.52
238.38
(123.47)
23.39
B-New Plants
36.77
(178.22)

15. TARIFF STRUCTURE (FY 2007-08)
Sector
Average cost of supply
Sale Price
(Subsidy)/GDS
Rs./MMBTU
3- Commercial
214.99
268.23
53.24
4- Industrial
238.38
23.39
5- Power
6- Cement
305.15
90.16
7-CNG Stations
264.87
49.88

16. PETROLEUM PRODUCTS’ PRICES
Determination & notification of petroleum products prices transferred to OGRA from OCAC w.e.f
Specific policy guidelines approved by the Cabinet in March, 2006 for computation of prices are as follows:
- Ex-refinery Price based on Import Parity Price + Excise Duty + Petroleum Development Levy (PDL) & Inland Freight Equalization Margin (IFEM)
- Marketing Companies’ margin (3.5%) & Dealers’ commission (4.0%) added
- 15% added to arrive at the Ex-Depot Sale Price of MS, HOBC, Kerosene Oil and LDO
Price of HSD which is the major product is notified by OMCs on the basis of weighted average cost of local and imported supplies

17. TARIFF STRUCTURE (w.e.f. 01-05-2007)
Particulars MS
HOBC
Kerosene
LDO
*HSD
Ex-refinery before PDC (Price Differential Claim)
33.14
33.96
33.91
29.43
34.25
PDC
0.00
(3.99)
(4.24)
(5.21)
Ex-refinery after PDC
27.92
25.19
29.04
Excise duty
PDL
8.18
15.57
IFEM
2.12
2.95
1.67
2.17
1.48
OMC margin (3.5%)
1.52
1.84
1.04
0.96
1.07
Dealer margin (4%)
1.74
2.10
1.22
Sales tax (15%)
7.00
8.46
4.60
4.25
4.92
Ex-depot sale price
53.70
64.88
35.23
32.57
37.73
*HSD is based on PSO’s price
*Custom duty on HSD is Rs per litre

18. LPG PRODUCERS’ PRICES
Under the Federal Government’s policy, prices of local LPG producers are fixed on the basis of FOB prices of LPG in the Middle East’s market for each month
LPG consumers’ prices are de-regulated, however, OGRA is authorized to intervene in the event of a cartelization / unreasonable prices. The reasonable price to be fixed by OGRA is based on:
Import parity price of LPG;
The local producers’ price;
Reasonable profit margin of LPG companies based on their last 2 years audited accounts.
The current price is Rs /- per domestic cylinder on an average basis which is reasonable as per above policy

19. REDRESSAL OF COMPLAINTS
Complaints redressal mechanism as specified under Complaints Resolution Procedure Regulations, 2003
Complaint entertained if the consumer fails to get relief from the licensee
Senior officers have been delegated the powers to resolve the complaints after getting requisite information from complainant, concerned company and, if required, after hearing the parties
Any person aggrieved by the decision of the delegated officer has a right to appeal to the Authority for review of the decision
Any person aggrieved by the decision of the Authority has a right of appeal in the higher Courts

20. REDRESSAL OF COMPLAINTS
Summary of Complaints (FY up to ):
Natural Gas
LPG
CNG
Oil
Total
Complaints received
1484 91 55 15
1645
Complaints resolved
1072 85 46 12
1215
Complaints under process
412 06 09 03
430
Appeals to the Authority against decisions of Designated Officer 34 -
Appeals decided by the Authority 23
Appeals to High Court against decisions of the Authority 02

21. Way Forward Expected audience Study visits
UFG / Line Losses Benchmarks
Human resource cost benchmarks
Complaint redressal mechanism
Review of Tariff Mechanism
Legal framework
Expected audience
Oil & Gas regulators across South-Asia
Electricity sector regulators