Globally, the oil and gas sector was marked with OPECs return in 2016, after it let the market forces play with the demand and supply for at least two years; with flagging prices, the cartel surprised many with the first cut in production since 2008.
At home, however, China Pakistan Economic Corridor (CPEC) mostly ran the show. The energy sector in Pakistan saw quite an activity in 2016; the column has been highlighting how the focus has remained on power generation.
In a recently published piece, the column picked up the key developments in 2016, particularly in the power sector, (Read Energy sector: The road ahead, published on January 03, 2017). We now look at some key initiatives taken on the regulatory side in the countrys energy sector.
Within the energy sector, power sector has had quite a ball this time around; not only has the sector seen increased activity on the operational side, the focus of ownership shifted to foreign entities and local coal. While little has been done on the transmission and distribution side, reforms by the National Electric Power Regulatory Authority (NEPRA) moved up a notch.
Approval of tariffs and licenses for R-LNG projects has been a key feature of 2016, along with the approval of upfront tariff on coal projects. The year also saw approval of competitive transmission tariffs. Finally, the regulator and the government has decided to take up competitive bidding for energy projects, which will definitely bring down rates. The regulator has also been seen working on chalking down a better method of calculating the sectors rate of return something the column analysed in detail as well.
The oil and gas exploration and production sector remained noiseless amid low oil prices, except for the extension and upgradation in Sui lease, which has also faced its share of criticism for breaching the 18th Amendment to the Constitution.
The downstream oil and gas sector has also seen some positive regulatory actions like upgradation to premium RON standard for petrol and deregulation of the premium fuel segment. Also, the increase in the margins for petrol and diesel while linking them to CPI has been a much-lauded attempt, though the implementation of the same is yet to be seen.
Amidst the positives, the regulatory actions have also faced criticism; governments stance on imported coal power plants and privatization in the sector has been dilly dallying. And lets not forget; the new year in power sector took a step back with the news of NEPRA being placed under power ministrys control.
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