Oil and Gas Regulatory Authority (OGRA) was established under the OGRA Ordinance, 2002 to regulated midstream and downstream oil and gas sector. Its objective is to foster competition, increase private investment and ownership in the midstream and downstream petroleum industry, protect the public interest while respecting individual rights and provide effective and efficient regulation. OGRA has laid down the regulatory framework and is effectively carrying out all its statutory functions, and playing a significant role in implementing Government’s comprehensive reforms programme in the oil and gas sector.

OGRA has also been given the responsibility of notifying/monitoring prices of various petroleum products.

Pakistan imports 85% of its petroleum products. Petrol and High Speed Diesel prices are linked with prices prevalent in Middle East. Weighted average cost of cargoes imported by PSO during the last month becomes the price for next month. Typical cost elements of the prices are as under;

1. Cost & Freight Price (up to Karachi port)
2. Import incidentals
3. Primary transportation cost
4. Oil Marketing Company Margin
5. Dealer Margin
6. Petroleum Levy
7. Sales Tax
8. Secondary Transportation Cost
9. Retail outlet price.
   
   Federal Government, w.e.f June 01, 2011, has deregulated petroleum product prices and has allowed refineries/Oil Marketing Companies (OMCs) to announce ex-refinery/ex-depot prices of Petrol, HOBC, LDO, JP-I and JP-8. OGRA has been assigned a monitoring role and continues to notify ex-refinery price of HSD and ex-refinery and ex-depot price of Kerosene. HSD ex-depot price is deregulated since June 2002..
   

OGRA determines revenue requirements of gas companies i.e Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL), pursuant to Section 8(1) and 8(2) of the Ordinance, to enable them to meet: (1) cost of gas, (2) operating costs, and (3) return on assets in accordance with the Federal Government's policy guidelines. Based on the revenue requirement, OGRA also determines the Prescribed Prices (to be retained by the gas company) for each category of consumers including domestic and refers the same to the Federal Government to decide the consumer sale prices.

Cost of gas, which constitutes bulk of the revenue requirement, is an uncontrollable factor. Any change in prescribed price is mainly due to the change in cost of gas (well-head prices) that is linked with the international prices of crude oil and HSFO in accordance with the lifelong contracts signed between the gas producers and Federal Government. Also, rupee to US$ exchange rate is important contributory factor in increase/decrease of gas prices.

The Federal Government, under Section 8(3) of the Ordinance advises within forty days the sale prices for each category of consumers after making adjustments for subsidies / development surcharge. The said sale prices are then notified by OGRA.

Federal Government empowered OGRA through amendment in the OGRA Ordinance vide notification dated 13th March, 2009 to determine and notify CNG prices in accordance with policy guideline provided by the Federal Govt. Accordingly, OGRA, pursuant to section 43B of OGRA Ordinance, 2009, is determining and notifying the CNG consumer price since August 2009

The cost elements included in CNG pricing are;

1. Cost of Gas
2. Compression Cost
3. Cost of Maintenance (Machinery)
4. Cost of Lubricant
5. Cost of Maintenance (Civil Works)
6. Depreciation (Machinery)
7. Rental / OMC margins
8. Cost of Labour
9. Various Fees / Taxes
10. Return on Investment
11. Gas Infrastructure Cess
12. Sales Tax

CNG prices are fixed for two regions, based on energy content of CNG.

Region-I                                                                                                                           
KPK, Baluchistan & Potohar region
(Rawalpindi, Islamabad & Gujjar Khan)                              1040 BTU/Sq Feet                 

Region-II
Sindh & Punjab (Excluding Potohar region)                         950 BTU/Sq Feet

Oil and Gas Regulatory Authority (OGRA) has been empowered under the OGRA Ordinance 2002 to regulate the LPG sector with effect from 15th March 2003 under the LPG (Production & Distribution) Rules, 2001.

The producer and consumer prices of LPG have been de-regulated by the government since September 2000. The government vide its LPG (Production & Distribution) Policies 2006 and 2011 has re-iterated its commitment to follow the de-regulation policy. As per LPG Production and Distribution Policy 2006, the LPG producers are allowed to fix their prices at their own on monthly basis. However, OGRA monitors the producers prices with the objective that the prices should not exceed the monthly Saudi Aramco CP (Contract Price). On the other hand, the consumer prices are de-regulated. OGRA’s role is limited to determination of price keeping in view the import parity price of LPG, producer price and audited accounts of LPG marketing companies for the last two years. In extraordinary and exceptional circumstances, if the prices of LPG marketing companies go beyond the calculated price only then OGRA intervene.