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2. Mirza Hamid Hasan 29 September 2015 2

3.  Need for Regulation  Historical regulation authority and mechanism  Creation of present regulatory agencies  Laws, rules and regulations governing the structure, powers, functions, procedures and working of Pakistan’s energy sector regulatory authorities. 3

4. NEPRA Program for Reform and Restructuring of Power Sector (WAPDA) formulated in 1980s Vertical and horizontal division of WAPDA with a view to corporatization, leading to privatization Introduction of IPPs in the power sector in 1990s Establishment of NEPRA in 1997 4

5.  To regulate the power sector to promote a competitive structure for the industry and to ensure the coordinated, reliable and adequate supply of electric power. By law NEPRA is mandated to ensure that the interests of the investors and the consumers are protected through judicious decisions based on transparent commercial principles and that the sector moves towards a competitive environment. 5

6. In order to fulfill its mandate and role, NEPRA has framed a number of rules and regulations, some of which are as follows:  NEPRA (Tariff Standards and Procedure) Rules 1998 as well as subsequent amendments  Performance Standards (Generation) Rules 2009 - SRO 1005-I-2009  Performance Standards (Transmission) Rules 2005 6

7.  NEPRA Performance Standards (Distribution) Rules 2005 along with amendments  NEPRA's Complaint Handling and Dispute Resolution (Procedure) Rules 2015  Market operator Registration, Standards and Procedure Rules,2015( Amendment)  Consumer Service Manual 7

8.  OGRA initially started as Natural Gas Regulatory Authority (NGRA)  Later on its role was expanded to include regulation of matters relating to oil, LPG and CNG and it was re-established as Oil and Gas Regulatory Authority (OGRA) in March 2002  Its Mission Statement reads as : “Safeguard public interest through efficient and effective regulation in the midstream and downstream petroleum sector.” 8

9.  To foster competition, increase private investment and ownership in the midstream and downstream petroleum industry  To protect the public interest while respecting individual rights and provide effective and efficient regulation.  The interests of all stakeholders namely the Consumer, Investor & the Government are protected through Independent & Fair regulatory practices. 9

10. In order to perform its functions OGRA has framed a number of rules and regulations, some of which are listed below:  CNG Rules 1992 CNG Rules 1992  LICENSING RULES,2002 LICENSING RULES,2002  TARIFF RULES,2002 TARIFF RULES,2002  LPG Production and Distribution Policy 2006 LPG Production and Distribution Policy 2006  LNG Policy 2006 LNG Policy 2006  LNG RULES 2007 LNG RULES 2007  LNG Policy 2011 10

11.  The 18 th Amendment to the Constitution has made some changes with regard to the powers and jurisdiction of Federal and Provincial Governments concerning electricity, oil and gas. This would obviously affect the functioning of NEPRA and OGRA in their traditional areas. The following slides will show the original and amended provisions in juxtaposition to explain the situation. 11

12.  Art. 157 Electricity.  (1) The Federal Government may in any Province construct or cause to be constructed hydro- electric or thermal power installations or grid stations for the generation of electricity and lay or cause to be laid inter-Provincial transmission lines:  Provided that the Federal Government shall, prior to taking a decision to construct or cause to be constructed, hydro-electric power stations in any Province, shall consult the Provincial Government concerned" 12

13.  (2) The Government of a Province may- (a) to the extent electricity is supplied to that Province from the national grid, require supply to be made in bulk for transmission and distribution within the Province; (b) levy tax on consumption of electricity within the Province; (c) construct power houses and grid stations and lay transmission lines for use within the Province; and (d) determine the tariff for distribution of electricity within the Province.  “(3) In case of any dispute between the federal Government and a Provincial Government in respect of any matter under this Article, any of the said Governments may move the Council of Common Interests for resolution of the dispute. 13

14.  Article No. 158  158 Priority of requirements of natural gas. The Province in which a well-head of natural gas is situated shall have precedence over other parts of Pakistan in meeting the requirements from the well-head, subject to the commitments and obligations as on the commencing day.  No Amendment 14

15.  Art. 161 (original) Natural gas and hydro-electric power.  (1) Notwithstanding the provisions of Article 78 the net proceeds of the Federal duty of excise on natural gas levied at well-head and collected by the Federal Government, and of the royalty collected by the Federal Government, shall not form part of the Federal Consolidated Fund and shall be paid to the Province in which the well-head of natural gas is situated;   (2) The net profits earned by the Federal Government, or any undertaking established or administered by the Federal Government from the bulk generation of power at a hydro-electric station shall be paid to the Province in which the hydro-electric station is situated. 15

16.  161(Amended) Natural gas and hydro-electric power.  (1) Notwithstanding the provisions of Article 78,- (a) the net proceeds of the Federal duty of excise on natural gas levied at well-head and collected by the Federal Government and of the royalty collected by the Federal Government, shall not form part of the Federal Consolidated Fund and shall be paid to the Province in which the well-head of natural gas is situated;  (b) the net proceeds of the Federal duty of excise on oil levied at well-head and collected by the Federal Government, shall not form part of the Federal Consolidated Fund and shall be paid to the Province in which the well-head of oil is situated. 16

17.  (2) The net profits earned by the Federal Government, or any undertaking established or administered by the Federal Government from the bulk generation of power at a hydro-electric station shall be paid to the Province in which the hydro-electric station is situated.  Explanation - For the purposes of this clause "net profits" shall be computed by deducting from the revenues accruing from the bulk supply of power from the bus-bars of a hydro-electric station at a rate to be determined by the Council of Common Interests, the operating expenses of the station, which shall include any sums payable as taxes, duties, interest or return on investment, and depreciations and element of obsolescence, and over- heads, and provision for reserves. 17

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