The Senate subcommittee on Cabinet Secretariat met on Thursday under the convenership of Senator Saadia Abbasi to examine in detail the modalities of oil and gas imports, and electricity pricing.
The Oil & Gas Regulatory Authority (OGRA) chairman informed the committee that under the parameters to determine import prices of petrol and diesel, the base price is fixed on the basis of 15 days average FOB (freight on board) prices of the Arab Gulf market.
He pointed out that the fortnightly prices are determined in terms of US dollars and converted to rupees per liter by applying the last available provisional exchange rate for the computation of the prices. The exchange rate variations are actualized at the time of revision in net prices based on the actual exchange rate being applied on the retirement of PSO’s letters of credit (LCs).
It was apprised that the mechanism remained effective as long the depreciation of the rupee was smooth. The rate used in the previous fortnightly price determination was Rs. 209.7251. The exchange rate used by OGRA for the prices for the first fortnight of August 2022 was 236.0394. It was suggested that the rate of the last day should be taken for the purpose of price calculation. This would smoothen the impact of rupee depreciation on petroleum prices. It was informed that a guideline was issued to ORGA to use the average exchange rate for the relevant period rather than the exchange rate of the last day for current as well as all future price determinations.
The National Electric Power Regulatory Authority (NEPRA) chairman stated that fuel price determination is not the job of NEPRA and its job is to ensure the supply of affordable, reliable, and sustainable power services by generation, transmission, and distribution companies.
The committee also inquired about K-Electric and its safety issues in Karachi. Senator Rukhsana Zuberi said that Karachi has severe safety issues and electricity wires are not being earthed due to which multiple accidents are taking place. The sub-committee decided to visit Karachi and take a briefing from K-Electric.