Sindh seeks role of CCIin oil and gas sector

ISLAMABAD: The Sindh government has criticised the federal government for, what it called, violation of the Constitution while dealing with the matters related to oil and gas sector causing injury to its financial interests, reveals the position paper of the Sindh government written to the Federal Ministry of Petroleum and Natural Resources and IPCC (inter-provincial coordination committee) of which a copy is available with The News.

The Sindh’s detailed point of view in its position paper will be discussed in the most crucial meeting on gas sector reforms to be held on September 28 in the Prime Minister Secretariat. The meeting will also deliberate the responses of other provinces about the outcome of the first four meetings held on gas sector reforms between the federal and provincial governments. The World Bank is currently assisting the dialogue on power sector reforms.

The Sindh top management has asked the Centre to restrict the Economic Coordination Committee (ECC) from trespassing in and transgressing into domain of the Council of Common Interests (CCI) and it also stressed frequent meetings of the CCI so that the competent forum could play its role effectively on the matter related to Part-II of Federal Legislative List (FLL). The provincial government also asked the federal government to put in place before the CCI and all the ECC decisions taken in the past on matters related to oil and gas sector for consideration and approval or endorsements.

The Sindh government in its detailed response pointed out that the CCI is the competent forum to consider and decide the policy matters and supervise all the decisions related to oil and gas sector. However, the ECC is unfortunately found to be encroaching upon and transgressing into the domain of the CCI by taking up the matters listed in the Part-II of the FLL. The Sindh government, according to the copy of its position paper, is cognisant of the fact that the CCI is not supposed to consider and decide ‘day-to-day’ affairs related to oil and gas sector. But decisions by the ECC clearly indicate that the matters submitted to it cannot be classified as day-to-day affair.

While substantiating its arguments, the government of Sindh mentioned some examples which are taken by the ECC and the Cabinet Committee on Energy affecting its financial interests. It mentioned that ECC took decision in 2014 on issuance of policy guidelines to Ogra on upward tariff determination for securing profitability of Sui Southern and Sui Northern.  In the position paper it says that in 2014 the ECC also took the decision dismantling of gas pricing agreement of Mari Petroleum Company Limited from Cost Plus Formula to Crude Oil based Formula. It also pointed out that the ECC in 2014/ 2015 took the decision on import of Re-gasified Liquefied Natural Gas (RLNG) and incidental and ancillary matters including storage, utilisation, pricing, tariff, transmission, marketing, swapping with local gas and quota allocation.

The Sindh government also figured out that the ECC in 2014/ 2015 took decision on construction of RLNG terminal in Punjab from the PSDP. It also highlighted that the federal government took decision on levy of Gas Infrastructure Development Cess (GIDC) through GIDC Act 2011, GIDC Ordinance 2014 and GIDC Act 2015. 

While referring to the national press, the Sindh government also pointed out that in recent meetings, the ECC in 2017 also took up 9-10 items related to oil and gas sector which include i) Allocation of gas from Sofiya filed to Sui Southern; ii) LPG AirMix projects; iii) Allowing sovereign guarantee to Sui Southern for LNG pipeline; iv) Re-allocation of gas from existing gas fields to Sui Northern; v) Determination and notification of UCH-II gas price; vi) Allocation of gas from Makori Deep gas field to Sui Northern; vii) Financing of 1.2 billion cubic feet per day of LNG-III pipeline project (from Karachi to Lahore) to be undertaken by Sui Southern and Sui Northern; viii) Marketing of diesel oil conforming on to Euro-IV and Euro-V under de-regulation environment; ix) Review of oil marketing companies and dealers’ margins. The government of Sindh deems that the ECC is not entitled to take such decisions as the CCI is the competent form which can take such decisions.

The provincial government also asked the federal government to put in place before the CCI and all the ECC decisions taken in the past on matters related to oil and gas sector for consideration and approval or endorsements.