The Oil and Gas Regulatory Authority (Ogra) recently issued the first-ever private sector distribution licence for natural gas sales in Sindh to a company incorporated just one day before the licence was granted.
The Karachi-based firm — Gaseous Distribution Company (GDC) — will be the first company ever to share the decades-old pipeline network of Sui Southern Gas Company Limited (SSGCL) and challenge its distribution and sales monopoly.
The GDC was registered with the Securities and Exchange Commission of Pakistan (SECP) on Dec 21 and granted a 10-year distribution licence on Dec 22.
Licence issued just one day after company’s incorporation
The SSGCL had not given a No Objection Certificate (NOC) for network-sharing or signed any covenant with the GDC for network capacity-sharing when the distribution licence was issued by the regulator, sources in Ogra told Dawn.
Under the licence, the new company is expected to purchase liquefied natural gas (LNG) from a future terminal operator or Pakistan State Oil (PSO) and sell it to select consumers, including CNG stations.
Ogra had conducted a public hearing to grant the distribution licence to the Pak Gas Distribution Company on Dec 14. The name was opposed by the PSO, saying there was a “clear intent to [deceive] the general public and especially PSO’s customers of ‘Pak Gas’ which is well-known brand” of the PSO.
On Ogra’s advice, the owners/directors of Pak Gas Distribution Company changed their nomenclature and applied for registration as Gaseous Distribution Company. The SECP incorporated the renamed company on Dec 21 and the procedure for issuance of the licence was initiated and completed on Dec 22.
Those familiar with the process suggest there should have been a fresh hearing for the new name and the licence should have followed an NOC on the network sharing by the SSGCL. Sui Southern and the Sindh government have been opposed to the use of LNG, saying the province had sufficient gas to meet consumption.
Ogra wrote that the petitioner (GDC) had submitted “the application for change of name from ‘Pak Gas Distribution Company Pvt Limited’ to ‘Gaseous Distribution Company (Pvt) Limited’ dated 22-12-2016 along with certificate of incorporation of petitioner’s company after change of name as ‘Gaseous Distribution Company (Pvt) Ltd’ dated 21-12-2016, duly signed by joint registrar/in charge SECP”.
This meant the incorporation was completed a day before the application was filed.
Ogra chairperson Uzma Adil Khan defended the decision to issue a fresh gas distribution licence for Sindh. She confirmed that the PSO had objected to the Pak Gas name and that Ogra sustained the objection, even though Pak Gas was not registered to the PSO.
Asked why a fresh hearing was not conducted for the renamed entity, the Ogra chief said that the licence was issued on Dec 22 because Ogra Member (Gas) Aamir Naseem was set to retire the same day.
In the past, she explained, there were public hearings on various issues but decisions could not be made on critical matters because of lack of quorum, which nullified the proceedings. Therefore, she said, it was decided that all three Ogra members should sign all decisions where they had completed the public hearing process, otherwise the entire process would go to waste.
She said a fresh hearing for the new name was not required because all other particulars of the company, including names of shareholders and directors, remained unchanged.
Ms Khan claimed that terms and conditions of the licence issued to the GDC were no different from a distribution licence issued for the SNGPL’s network to the Universal Gas Distribution Company a couple of years ago.