Oil and Gas Regulatory Authority (Ogra) has granted an extension of two years to Sui Northern Gas Pipeline Limited (SNGPL) for construction of LPG Air-Mix plant in Gilgit as the company has failed to meet its earlier deadline for the completion of the project.
Ogra has also imposed a fine of Rs 20 million on SNGPL for two years delay in the installation of LPG Air-Mix plant in Gilgit and misreporting to Economic Coordination Committee (ECC) of the Cabinet regarding the progress of the project.
“The Authority observes that the petitioner was unable to give strong justifications for not completing the project in time, and rather, exhibited neglectful and lethargic approach to execute the project. Thus, the petitioner could not satisfy the requirement under Rule 13 of LPG Rules 2001, hence is liable to be penalised under Rule 29 of LPG Rules, 2001,” Ogra said in its decision on the SNGPL’s review petition for extension in the licence granted for construction of LPG air Mix Plant and Distribution of LPG air-mix through pipeline in Gilgit.
The Oil and Gas Regulatory Authority (Ogra) held the SNGPL responsible for slackness on execution of the project despite the fact that NOCs were granted and funds were approved by the Authority in Review of Estimated Revenue Requirement (RERR) for FY 2019-2020. This slackness on part of the management will result in cost escalation of the project, the decision said. Ogra advised the SNGPL management to take disciplinary action against all relevant executives on following grounds: a) Undertook the project despite the fact the Regulator specifically decided not to grant extension in the licence, wilful defiance of the Authority’s directions, Mislead ECC and the Authority about completion status of the project and undue delays resulting in escalation of project cost.
The Authority observes that the Petitioner was granted a licence on June 28, 2019, for the construction of LPG Air-Mix Plant at Mouza Konodass, Gilgit, which was valid till June 27, 2021. The petitioner did not undertake construction works within the stipulated period of two years and requested for its extension on May 20, 2021. However, the request of the petitioner was not permitted by the Authority.
Furthermore, the company did not submit any progress report to the regulator which is violation of its licence condition, which requires from licensee to submit quarterly report. The decision further said that despite grant of all NOCs in 2019 and approval of funds of Rs 454 million by Ogra, the petitioner could not kick start construction works at the site up till the end of 2020.
The petitioner’s slackness on execution of this project is not only violation of licence issued under LPG Rules, 2001, but has far reaching financial implications on the natural gas consumers. Further, SNGPL obtained ECC approval through false information of the completion status of the project; hence the SNGPL has been in violation of licence condition.
The Authority takes serious notice of non-completion of the project by the petitioner within initially granted period. In view thereof, the Authority hereby decides to impose a penalty of Rs 0.5 Million under Rule 29 of LPG Rules, 2001. Further on account of non-compliance of Licence conditions No. 2 & 9 read with Rule 20 (xix) of Ogra (licensing) Rules, 2002, a penalty of Rs 19.5 million is imposed under Rule 28 of Ogra (licensing) Rules, 2002, with the directions that the imposed penalty shall be borne by the petitioner out of its own profits and the said amount shall neither be passed on to other consumers nor it shall be made part of the Annual Revenue Requirements.
