OGRA dysfunctional

The Islamabad High Court barred Secretary Cabinet Division from exercising his powers as Acting Chairman of Oil and Gas Regulatory Authority (Ogra) and observed that the Authority had been rendered dysfunctional because of a lack of quorum with two critical posts lying vacant, namely Members’ Oil as well as Gas. What was even more disturbing was a court observation that not only chairman Ogra but all members were facing inquiries for wrongdoing. The Ogra law specifies that the presence of Chairman (with the acting chairman not empowered to take key decisions) as well as two members is a prerequisite for completing the quorum required to enable them to take key decisions that have repercussions on the country’s oil and gas sectors.

In February 2015 Punjab and the federal capital faced an unprecedented petrol crisis that seriously dented the country’s productivity as well as led to untold hardship for the general public. This compelled the Prime Minister to send Ogra chairman on a forced 3-month leave – a decision that was widely believed to have been taken with the objective of apportioning blame on bureaucrats, thereby absolving his relevant cabinet ministers of any responsibility. While in a democratic country the relevant minister would usually resign because it is his ultimate responsibility to ensure that all departments/ministry staff in his portfolio perform their duties in a responsible manner yet Nawaz Sharif’s administration has been particularly lax in holding its cabinet members as well as those appointed by him responsible. The initial highly partisan inquiry, consisting of two men with a long-standing affiliation with the PML-N, apportioned blame on senior bureaucrats in Pakistan State Oil (PSO) and Ogra, both under the administration of Ministry of Petroleum and Natural Resources, and endorsed the Prime Minister’s initial knee-jerk reaction (as it was prior to any investigation) to suspend four individuals from PSO and Ogra.

A reference was filed against the Ogra chairman before the Federal Public Service Commission, as required under the relevant rules. The Ogra chairman filed a petition in court and was restored though an intra-court appeal filed by the government suspended the earlier order. Given the ongoing litigation the government was disabled from appointing a full chairman and resorted to an acting chairman who, as per the Ogra Act, cannot take any major decisions. While the situation is bad enough with respect to the chairman yet what just compounds the problem is an inordinate delay in making senior appointments by the government that compromises the capacity of the entity to perform its responsibilities – Ogra Members Oil, Gas and Finance positions are all lying vacant. And finally, what is even more disturbing is the fact that the three previous office holders are facing investigation – Members Oil and Gas (both facing charges of conflict of interest) and member finance was suspended for more than two years on charges of corruption in the 82 billion rupee embezzlement in which Tauqir Sadiq was an accused.

The reasons for the petrol crisis are rooted in the circular debt which disables the PSO from opening letters of credit due to a lack of liquidity, compelling it to write to the Ministry of Water and Power as well as the Ministry of Finance to either ensure its dues are cleared or else release enough funds to enable it to open letters of credit. That such a letter was written last year by PSO but went unanswered has since been reported though again no ministry or minister is willing to accept any responsibility. Ogra’s responsibility is to determine and ensure the required storage; however, its officials point out that it does not have the required wherewithal to check that oil stocks are being maintained by oil marketing companies (OMCs). Additionally, Ogra contended that OMCs sent bogus stock data.

The entire crisis has revealed two disturbing elements with respect to the Sharif administration. First, that its delays in senior appointments are seriously compromising the workings of key entities and secondly its focus on protecting poorly performing ministers is leading to a general discontent with his administration which is bound to have a political cost. There is still time to resolve these two issues; however, unfortunately, the government does not appear to be concerned about them.