ISLAMABAD: The Cabinet Committee for Disposal of Legislative Cases (CCLC) headed by the Law Minister, Dr Faroogh Naseem, has reportedly shown reluctance to clear International Monetary Fund’s (IMF's) "desired" amendments in the Ogra Ordinance, saying that it will deprive the government of the power to freeze or partially pass on gas price rise on to the consumers, well informed sources told Business Recorder.
Finance Ministry, sources said, has also refused to share the legal instrument relating to the said IMF benchmark with the CCLC despite repeated requests of Cabinet Division, the sources added.
Sharing details, sources said, during the meetings with an IMF Mission in April-May 2019, the Petroleum Division agreed to certain structural benchmarks under the 2019-2022 Extended Fund Facility (EFF) programme, including a benchmark related to gas sector which proposed "changes to the OGRA Act for approval of Council of Common Interests (CCI) by December 2019 to eliminate the gap between regular semi-annual tariff determination and notification. After CCI's approval, a Bill will be introduced in the Parliament for adoption." In order to meet the benchmark, the Petroleum Division and Ogra proposed relevant amendments in a Section of the OGRA Ordinance, 2002. On January 21, 2021, the CCLC was briefed on the matter, as Part II of the Federal Legislative List, and placed before the Council of Common Interest (CCI) under Article 154 of the Constitution which, on December 23, 2019 approved the proposed amendments in the OGRA Ordinance, 2002. Law & Justice Division vetted the Bill containing the proposed amendments.
The CCLC was also informed that after approval of the Prime Minister, the Cabinet Division submitted the summary on April 2, 2020 for approval of the CCLC, which deferred consideration of the summary and directed as under: (i) Finance Division to submit the instrument regarding IMF's Extended Fund Facility for Pakistan 2019-2022. Structural Benchmark and Performance Criteria under which the amendment has been proposed in the Ogra Ordinance, 2002 for perusal of the members of the CCLC; (ii) either the amendment may also be proposed in the relevant laws, such as the Income Tax Ordinance, GDS, or non-obstante clause may be added in the proposed amendments and; (iii) the summary for the CCLC, along with the annexes, should be properly page-numbered and legible.
The CCLC was further informed that in light of observations given by the CCLC in its last meeting April 13, 2020 on the matter, the Cabinet Division requested Finance Division multiple times, at appropriate level, to address the CCLC observations, and furnish the legal instrument relating to the said IMF benchmark. However, this has not been received to date. The matter is being taken up in the forthcoming meeting of the CCI. Therefore, the comments of the Petroleum and Finance Divisions may be invited in person to give their views/comments to firm up the amendments in Section 8 (3), 8(4) & 8(5) of the OGRA Ordinance, 2092 for approval of the CCLC. The Finance Division informed CCLC that the proposed amendment in section 8 of the OGRA Ordinance is required in order to meet one of the conditionalities of the IMF package agreed in 2019. The amendments are to be made in order to stop the enhancement of circular debt which is increasing day by day. It was noted that OGRA determines revenue requirement of the gas companies twice a year based on cost of gas, distribution cost of gas and return on assets. Thereafter, it decides pricing of gas. The members pointed out that by adding the proposed proviso into section 8(3), the Government's hands will be tied and it may be able to only increase the price on half yearly basis. In case the Government does not intend to increase the price, it will not be able to do so in the presence of the proposed proviso. It was suggested that the matter required further deliberations and it may be deferred for consideration till the next meeting of the CCLC. After a detailed discussion, the summary was deferred for further deliberation.
Copyright Business Recorder, 2021
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