Natural Gas Regulatory Authority Ordinance, 2000

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NATURAL GAS REGULATORY AUTHORITY ORDINANCE, 
2000 
ORDINANCE NO. I OF 2000 AN ORDINANCE 
 
F.No.2 (1)/2000-Pub:___The following Ordinance promulgated by the President is 
hereby published for general information:- 
to provide for the establishment of Natural Gas Regulatory Authority 
WHEREAS it is expedient to foster competition, improve the efficiency and availability 
of natural gas transportation and distribution services in Pakistan through increased private 
ownership and improved regulation; 
AND WHEREAS the National Assembly and the Senate stand suspended in pursuance 
of the Proclamation of the fourteenth day of October, 1999, and the Provisional Constitution Order 
No.1, as amended; 
AND WHEREAS the President is satisfied that circumstances exist which render it 
necessary to take Immediate Action; 
NOW, THEREFORE, in pursuance of Proclamation of the fourteenth day of October, 
1999, and Provisional Constitutional Order as well as Order No.9 of 1999, and in exercise of all 
powers enabling him in that behalf, the President of the Islamic Republic of Pakistan is pleased to 
make and promulgate the following Ordinance:- 
 
1. Short title, extent and commencement  :___(1) This Ordinance may be called the  
Natural Gas Regulatory Authority Ordinance, 2000. 
(1)  It extends to the whole of Pakistan.  
(2)  It shall come into force at once.  
2. Definitions :___In this Ordinate, unless there is anything repugnant in the subject or 
context,- 
 
(i) “Authority” means the Natural Gas Regulatory Authority established under 
section 3;. 
(ii) “category of retail consumer” means a category of retail consumer 
designated as such by order of the Federal Government from time to time; 

 
 
(iii) “Chairman” means the Chairman of the Authority and includes an Acting 
chairman 
(iv) “consumers” means retail consumers or wholesale consumers; 
(v) “development surcharge’ means the amount payable by each licensee under 
subsection (6) of section 19, and calculated in accordance with the rules and 
which represents, in respect of each category of retail consumer to which it is 
applicable, the amount, If any, by which the sale price exceeds the prescribed 
price; 
(vi) “distribution” means the Activity of transporting natural gas through 
pipelines and associated 6cilities at a pressure which would not ordinarily 
be expected to exceed 300 psig; 
(vii) “existing companies” means the Sui Southern Gas Company Limited and 
the Sui Northern Gas Pipelines Limited; 
(viii) “existing gas purification facilities” means the facilities at the Sui Gas 
Field used b3’ the·· existing companies for purification as on the 
date of commencement of this Ordinance; 
(ix) “financial year’ means the period beginning on the first day of July in a 
calendar ‘year and ending on thirtieth day of June in the next following 
calendar year: 
(x) “licence” means a licence granted by the Authority under this Ordinance 
and the Rules to undertake the regulated activities; 
(xi) “licensee” means the grantee or holder of a  licence;  
(xii) “Member” means a member of the Authority including the 
Chairman; 
(xiii). “minimum charges” means the amount a licensee may charge a retail consumer 
as notified by the Federal Government under sub-section (9) of 
section 19; 
(xiv) “natural gas” means hydrocarbons or mixture of hydrocarbons and other 
gases which at sixty degrees Fahrenheit and atmospheric pressure are in 
the gaseous state (including gas from gas wells, gas produced wit crude oil 
and residue gas resulting from the processing of gas) consisting primarily of 
methane, together with any other substances produced with such 
hydrocarbons; 
(xv) “person” includes an individual firm, association of persons, partnership, 
company, mist, corporation, or any other legal entity; 
(xvi) “prescribed period” means the period of time prescribed in the rules for 
the giving of a notice or directions or for the performance of any ocher 
act or acts by the Federal Government or the Authority; 
 
 
 
(xvii) “prescribed price” means the amount dete rmined under section 19 
which represents the amount a licensee would be entitled to receive from 
each category of its retail consumers in order to achieve its total revenue 
requirement for the existing companies, and in such manner as determined 
by the Authority from time to time for other licensees; 
(xviii) “public emergency” means the occurrence of any natural calamity, or 
an event which threatens public safety, or the sovereignty, security or 
integrity of Pakistan and declared as such by the Federal Government; 
(xix) “purification’ means the purification or processing of natural gas and 
may include the removal of any of its constituent gases or the separation 
from gas of any oil or water; 
(xx) “regulated activity’ means any of the activities of transmission, 
distribution or sale of natural gas by any person-and the purification of 
natural gas by an existing company using the existing gas purification 
facilities; 
(xxi) “retail consumer” means a person who purchases or receives natural gas 
for consumption and not for delivery or resale to others and shall include a 
person who owns or occupies any premises which are connected to a supply 
of natural gas; 
(xxii) “rules” means rules made under this Ordinance;  
(xxiii) “sale” means the sale of natural gas to retail consumers but shall not 
include sale of natural gas for vehicular use and self consumption by a 
licensee in connection with its regulated activity and the expression 
‘seller’ shall be construed accordingly; 
(xxiv) “sale price” means the price notified under sub-section (3) of section 19 
at which a licensee is authorised under this Ordinance and its licence to 
sell natural] gas to that category of retail consumer and the expression ‘sale 
prices’ shall be construed accordingly; 
 
(xxv) “tariff” means the part of any prescribed price determined by the Authority 
for each licensee in accordance with the terms and conditions of its licence 
which relates to the undertaking of a single regulated activity and the 
expression “tariffs” shall be construed accordingly; 
(xxvi).  “total revenue requirement” means for each financial year, that total 
amount of revenue determined by the Authority for each licensee In 
accordance with the terms and conditions of its licence to be required by 
that licensee so as to ensure it achieves the rate of return provided for in 
its licence; 
 
 
(xxvi).  “transmission” means the activity of transporting gas through pipelines 
and other  facilities at a pressure of not less than 300 psig or such 
pressure as the Authority may prescribe from time to time; and 
(xxviii) “wholesale consumer” means a person who purchases or receives natural gas 
for delivery or resale to others but does not include a person dealing in the 
sale of compressed natural gas as fuel for vehicular use. 
 3. Establishment of the Natural Gas Regulatory Authority :___ (1) As soon as may 
be but not later than ninety days from the commencement of this Ordinance, the Federal 
Government stall, by notification in the official Gazette, establish a regulatory authority which 
shall be known as the Natural Gas Regulatory Authority. 
(2) The Authority shall consist of a Chairman and two Members, one of whom shall 
be designated as the Member Technical and other as the Member Finance. 
(3) The Chairman shall be an eminent professional of known integrity and competence 
with a minimum of twenty-five years of related experience In law, business, engineering, 
finance, accounting, economics or the oil and gas technology. 
(4) The Member Technical shall be a person who is well qualified, experienced, eminent 
professional of known integrity and competence with a minimum of twentyfive years relevant 
technical experience in the field of gas including the transmission and distribution thereof. 
(5) The Member Finance shall be a person who is well qualified, experienced, 
eminent professional of known integrity and competence with a minimum of twenty-five years 
relevant financial experience in the field of corporate finance and accounting preferably in a 
public utility.. 
(6) Subject to sub-section (9),- 
(i) the Chairman shall be appointed by the Federal Government for a term of 
four years and shall be eligible for reappointment for a similar term; 
(ii) the first Member Technical shall be appointed by the Federal Government for 
an initial term of three years and shall be eligible for reappointment for a term of 
four years. Subsequent Member Technical shall be appointed by the 
Federal Government for a term of. four years and shall be eligible for 
reappointment for a similar term; and 
(iii) the first Member Finance shall be appointed by the Federal Government for 
an Initial term of two years and shall be eligible for reappointment for a term of 
four years. Subsequent Member Finance shall be appointed by the Federal 
Government for a term of four years and shall be eligible for reappointment 
for a similar term. 
(7) The Authority shall make its decisions in a. meeting of which each member shall 
have reasonable notice of the time, place and the maker on which the decision shall be taken. 
The quorum for a meeting shall be the Chairman and one member. If the Chairman is absent 
from Pakistan or his unable to perform the function of his office for any other reason, the 
quorum for meeting of the Authority shall be two members one of whom shall be appointed 
by the Federal Government to act as Chairman. 
 
 
(8) The decisions of the Authority shall be made if the meeting is attended by 
 
(i) The Chairman and two members, with the concurrence of the majority; 
or  
(ii) The Chairman and one member, with the concurrence of the Chairman and 
the member; and 
(iii) Only the two members, with the concurrence of both the members 
 
‘The Chairman and a member shall retire on attaining the age of sixty-five years. 
(9) The Chairman or a Member shall not have any direct or indirect financial interest in, or have 
any connection with, any person engaged in any regulated activity. It shall not be lawful for the 
Chairman any Member, for so long as he holds office and for a period of two years thereafter 
to maintain, acquire or purchase, whether in his own name or otherwise, any interest in any 
firm or company or association of persons carrying on regulated a activities. 
 (10)  The Chairman or a Member may resign from his offic e by submitting his 
resignation to the Federal Government. The Chairman or a Member may only be removed 
from his office It on an Inquiry by the Federal Public Services Commission, he is found unable to 
perform the functions of his office because of mental or physical incapacity or 
misconduct. 
 (11) In case of a vacancy occurring due to the death, resignation or removal of the 
Chairman or a Member the Federal Government shall, within a period not exceeding ninety days, 
appoint another qualified person. 
    (12) The Chairman and Members shall be paid such emoluments as may be 
determined by the Federal Government and shall not be varied to their disadvantage during their 
terms of office: 
    (13) ‘The Chairman and Members shall not, during their terms of of fice, engage 
themselves in any other services, business vocation or employment. 
    (14) A person who has held the office as Chairman or a Member shall not before 
the expiration of two years after he has ceased to hold that office enter into the employment of 
or accept any advisory or consultancy relationship with, ~any person engaged in regulated 
activities in Pakistan or any related undertaking except with the written  approval of the 
Federal Government 
     (15) No act or proceeding of the Authority shall be invalid by reason only of the 
existence of a vacancy in, or a defect in, the constitution of the Authority. 
 4. Powers and functions of authority :___ (1) The Authority shall be exclusively responsible 
for granting licences for the carrying out of regulated activities and regulating such activities. 
(2) Without prejudice to the generality of the foregoing, the Authority shall- 
(a)  grant, issue, and renew licences and to modify, amend, suspend, 
review, cancel and reissue or terminate any licence for the 
 
 
undertaking of any regulated activity and to prescribe 
requirements to be satisfied by applicants for the grant of licence; 
(b) prescribe, review, approve and regulate tariffs pertaining to 
regulated activities and operations of the licensees; 
(c) determine the well-head gas prices for the producers in accordance 
with the relevant agreements or contract, and notify the same in 
the official Gazette on the first day of July and the first day of 
January each year; 
(d) promote effective competition in the wide flaking of regulated 
activities; 
(e) promote technical and operational efficiency in the carrying out 
of regulated activities 
(f) facilitate - the provision of common carriage for the achievement 
of a competitive environment; 
(g) monitor and enforce compliance by licensees with conditions 
of their licences; 
(h) protect the interests of consumers in accordance, with the 
provisions of tills Ordinance and the rules; 
(i) provide protection to the retail consumers against anti -
competition conduct of the licensees; 
(j) resolve complaints and other claims against licensees for 
contravention of the provisions of this Ordinance or the rules; 
(k) resolve disputes between licensees and between licensees and 
consumers; 
(l) in consultation with licensees specify, administer and enforce 
performance, service and safety standards and other conditions for 
undertaking any regulated activity. 
(m) in consultation with licensees, specify, re view and certify 
standards for the equipment and materials to be used in 
undertaking any regulated activity; 
(n) in consultation witH the Federal Government and licensees 
determine for each licensee a reasonable rate of return which may 
be earned by that licensee in the undertaking of regulated activity 
keeping in view all the circumstances; 
(o) prescribe a uniform form of accounts and accounting practices to 
be complied with by the licencees; 
(p) oversee the capital expenditure to be made by licensees In connection 
with any regulated activity; 
 
 
(q) prescribe procedures and standards vestment programmes by 
licensees; 
(r) prescribe fines for contravention of the provisions of this 
Ordinance; and 
(s) perform any other functions or exercise power as may be 
incidental or consequential to the performance of any of its 
functions or the exercise of any of its powers. 
( 3 )The Authority shall levy and collect licence fees and other charges in respect of any of its 
functions at such rates as may be determined, from time to time, in accordance with the rules. 
 
 5. Power of the Federal Government to Issue policy guidelines :___ (1 ) The Federal 
Government may, as and when it considers necessary, issue guidelines to  the Authority on 
matters of policy consistent with the provisions of this Ordinance or the rules.       
( 2 )            Without prejudice to the generality of the foregoing but subject to the provisions of 
subsection (3) to (5), the Federal Government may issue policy guidelines to the Authority 
regarding the supply of gas to a particular licensed area and the Authority may require the 
licensee to provide gas In the said area within such time as the Authority may determine. 
(3).  If a licensee Is of the opinion that in accordance with the requisite financial viability 
criteria it is not economically viable for it to supply gas in the said area It shall give its reasons to 
the Authority. 
(4) If the Authority agrees with the licensee that it is not financially viable for the licensee  
to provide gas in the said area unless the Government makes special financial arrangements 
with the licensee it shall report the matter to the Government and the licensee shall not be 
obligated to supply gas in the said area unless suitable financial arrangements are made by the 
Federal Government. 
(5) On the receipt of instructions from the Authority, the licensee shall supply gas to the  
said area within such time as the Authority may specify 
6. Delegation of powers :___ (1) The Authority may, by general or special order, 
delegate to any officer of the Authority to exercise on behalf of the Authority any of its powers, 
duties or functions wider this Ordinance abject to such conditions as it may think fit to Impose. 
(2) Notwithstanding the provisions of sub-section (1). the powers specified in clauses (a), (b) 
and (n) of sub-section (2).of section 4 shall only be exercised in a meeting of the Authority. 
7. Recruitment of employees :___To carry out the purposes of this Ordinance the 
Authority may, from time to time, employ officers, members of its staff, experts, consultants, 
advisers and other employees on such terms and conditions as it may be deem fit. 
8. Chairman, incubus, employee s, consultants and advisers  :___ (1) The 
Chairman, Members and employees of the Authority shall, when acting or purporting to act in 
pursuance of any of the provisions of this Ordinance or the rules or regulations made 
 
 
thereunder, be deemed to be public servant a within the meaning of section21 of the Pakistan 
Penal Code (Ordinance XLV of 1860). 
(2) The employees of the Authority shall be governed by the terms and conditions of their 
contract of employment and shall not be deemed to the civil servants within the meaning of 
The Civil Servants Act. 1973 (LXXI.of 1973). 
 
9. Budget and accosts :___ (1) The Authority, in respect of each financial year, 
prepare its own budget In accordance with prescribed procedures and shall maintain complete and 
accurate books of accounts of its actual expenses and receipts. 
( 2 )                The accounts of the Authority shall be audited annually by the Auditor -General of 
Pakistan. 
( 3 )               The Federal Government shall provide ~ one -time lump -sum grant of fifty 
millionrupees for the establishment of the Authority, whereas for all subsequent years, the 
Authority shall use the funds collected in pursuance of sub-section (3) of section 4. 
 10. Repo rt of the Authority  :___ (1) The Authority shall submit to the Federal 
Government- 
(a) a report at the end of every financial year but before the last day of December 
of that year, on the conduct of its affairs including anticipated development for 
the following year; and 
(b) a report, from time to time on the state of natural gas in the country identifying the 
ownership, operation, management,; control and efficiency of regul ated 
activities. amount of transmission and distribution capacity, present and future 
demand of natural gas, cost of regulated activities and other matters relating 
to natural gas. 
 11. Inspection by public :___ (1) The Authority shall maintain public files that shall 
be kept open in convenient form for public examination during reasonable business hours. 
(2) Subject to procedures and standards for confidentiality, the Authority’s public files shall 
include all relevant documents to be maintained and indexed as the Authority deems fit. 
 
 12. Regulated activities prohibited without licence :___ (1) No Person shall undertake 
any regulate activity without having obtained a licence in the form prescribed by the rule. 
(2) Notwithstanding the provisions of subsection (1) the existing companies and all other 
persons to the extent they were carrying on the activities is transmission, distribution or sale 
of natural gas on the commencement of this Ordinance shall, for such period as may be 
prescribed in the rules, be deemed to be licensed to carry on regulated activities on such terms 
and conditions as may be prescribed in the rules. 
 13. Exclusive power to grant licenses :___ (1)The Authority shall have the exclusive 
power, to be exercised in the manner prescribed in the mica, to grant, extend, modify, amend, 
suspend or revoke a licence in respect of any regulated activity. 
 
 
(2) As far as practicable every licensee unless specifically exempted by the Authority shall 
get itself registered as a company in accordance with the provision of the Companies 
Ordinance, 1984 (XLVII of 1984). 
(3) All, applications for the grant of any licence shall contain such information and be in 
such format as may be prescribed by the rules. 
(4.) A licence Issued by the Authority shall be subject to such terms and conditions as may 
be prescribed by the Authority under the rules. 
(5) A licence may be restricted by category of regulated activity area of operation, period 
of authorisation and such other terms as the Authority may, in accordance with the rules, 
determine. 
(6) The Authority may grant exclusive licences to carry on any of the regulated activities to 
such persons, and on such terms, in respect of such areas or between such places and for 
such periods, as the Authority may determine in accordance with the rules. 
 
 14. Transfer or assignment of licences :___ No licence shall, without the prior written 
approval of the Authority, be assigned or transferred. 
 
 15. Power to takeover or interrupt licensed regulated  activities In public 
emergency :___ (1) In the event of any public emergency the Federal Government may, by order 
In writing, require the Authority and the Authority shall thereby be empowered to 
(a) take or cause to be taken temporary possession or control of any relevant facility, 
plant or equipment, maintained or worked by any licensee; or 
(b) issue directions to the licensee in relation to the undertaking of any regulated 
activity governed by the licence; 
(c) place such restriction on regulated activities being undertaken by, or provision of 
regulated activities to, any person or class of persona as may be specified in such 
order; or 
(d) intercept and divert any regulated activity being undertaken by any person specified 
in such order. 
( 2 ) The Federal Government shall provide adequate compensation to such person or  
persons as may be affected by the action of the Authority under sub -section (1) in such 
manner as may be prescribed by the rules. 
16. Power to regulate distribution of gas :___Notwithstanding anything contained 
in a contract or agreement between one licensee and another or between a licensee and a 
consumer, the Authority may if it is satisfied that it is necessary in the public interest to do, by 
order in writing, determine the maximum amount of gas which a licensee may supply to 
another licensee or to a consumer, whether generally or during such period as may be specified 
In the order. 
 
 
17. Accounting requirements :___All licensees shall maintain books of accounts in a 
form prescribed by the Authority so as to enable the Authority to obtain all relevant information 
as it may require in order to determine that licensee’s total revenue requirement for each financial 
year to establish or vary any tariff or to exercise any other power contained in section 4. 
18. Tariff for individual regulated activities :___ (1) No licensee shall charge for 
any regulated activity any fixed or variable amount in excess of the relevant tariff as approved 
by the Authority from time to time in accordance with the terms and conditions of its licence. 
(2) The criteria for the approval and modification of tariffs for regulated activities shall be 
prescribed in the rules and in the terms and conditions of each licence and shall, inter.alia 
include: 
(a) provision for the protection of consumers against monopolistic pricing;  
(b) licensee’s cost on research, development and capital Investment programme; 
(c) provision of reasonable returns to the licensee to attract investment of the 
quantitative and qualitative improvements of regulated activities; 
(d) encouragement and reward of efficiency;  
(e) sending of appropriate price signals regarding the relative abundance or scarcity 
of supply of such regulated activity; 
(f) minimising economic distortions; and 
(g) keeping in view the costs of alternate or substitute sources of energy. 
(3) The Authority shall, at least ninety days prior to each financial year, determine an 
estimate of to tal revenue requirement of each licensee in accordance with the terms and 
conditions of that licensees licence and shall inform the Federal Government of each such 
determination. 
(4) At the start of each quarter a licensee shall submit for review by the Authority its total 
revenue requirement for the said financial year after incorporating the actual changes in the 
well-head prices and other relevant factors, and the Authority shall determine the revised total 
revenue requirement and inform the Federal Governme nt promptly of such revised 
determinations. 
 19. Pricing for retail consumer  :___ (1). At the time of each determination by the 
Authority of the total revenue requirement of a licensee pursuant to sub-section (3) of section 18, 
the Authority shall. inform tote Federal Government the prescribed price which should apply in 
relation to each category of retail consumers  of that licensee.  
(2) The Federal Government shall consider the Authority’s determination made under 
subsection (1) and within thirty days thereof inform the Authority of the prescribed prices which 
will apply in relation to each category of consumers of a licence and the Authority shall promptly 
notify each licensee undertaking sales to consumers as to the prescribed prices applicable to it: 
 
 
 Provided that if the Authority is required to reconsider its determination pursuant to 
sub section (5), it shall only notify each licensee undertaking sales to consumers as to the 
prescribed prices applicable to it after reconsideration. 
(3) The Federal Government shall, within thirty days of informing the Authority in 
pursuance of sub-section (2), notify in the official Gazette the prescribed price applicable to a 
licensee and the minimum charges and maximum sale prices which a licensee will be permitted 
to charge each category of retail consumer. 
(4) No licensee shall charge any consumer for the supply of natural gas any sale price or 
minimum charge other than the sale price are minimum charge notified by the Federal 
Government under sub-section (3): 
Provided that if the Federal Government does not issue the notification under subsection (3) 
within the time specified therein and the authority has determined the price in respect ofany 
category of retail c6nsmner in excess of the most recently notified sale price for that category 
of retail consumer, the authority shall authorised the licensee to charge the said retail consumer 
the price so determined by it. 
(5) If the Federal Government is of the view that the prescribed prices determined by the 
Authority under sub-section (1) are based upon inconsistent assumptions it shall require the Authority 
to reconsider its determination under sub-section (I). Thereupon the Authority shall re-determine 
and inform the prescribed prices which shall apply to each category of consumers of a licensee 
again to the Federal Government, pursuant to which the Federal Government shall notify, in the 
official Gazette, the prescribed price applicable to a licensee and the minimum charges and sale 
prices specified in sub-section (3): 
Provided that consideration and reconsideration shall be completed within thirty days. 
(6) Each licensee shall pay to the Federal Government the development surcharge in respect 
of each unit of natural gas sold during the calendar month within two months of the close