BERC broke rules to make new rules

The fate of over 3,500 licences in the energy sector has become uncertain as they were provided under a regulation deemed illegal by the law ministry.

Bangladesh Energy Regulatory Commission (BERC) issued or renewed the licences for production, operation and marketing of electricity, gas or petroleum products under the Licencing Regulations-2016.

To pass a regulation, the law ministry's permission is mandatory. It is also illegal to publish any gazette on regulations without the ministry's vetting.

But the BERC violated both the rules to pass the 2016 regulations, a BERC official said, preferring not to be named. "The Commission suppressed this until the law ministry intervened. This is extremely embarrassing for us," he added.

The ministry in a letter to the Commission on December 10, 2018, said the 2016 regulations were passed without a public hearing and vetting from the ministry and "it is not a document with legal status."

It took the BERC over two years to make a move to right the wrong. In a special meeting on March 24 this year, it acknowledged the rules violation.

In a circular on April 6, it made public its decision to rectify the mistake by amending the previous Licencing Regulations of 2006, without mentioning anything about the 2016 amendment.

The circular also said the Commission will seek objections or suggestions through a public hearing, set for September 16.

Despite the procedural flaws, the Commission issued or renewed 1,058 licences in power sector, 932 in gas sector and 1,600 in petroleum sector in five years till last year under the 2016 regulations, according to its annual report.

These licensees include power plants, LPG producers and distributors, filling stations and oil importers, both public and private.

WHY THE AMENDMENT?

Officials are unwilling to talk about the justification of the "secret" amendment, but certain changes clearly favour the business in the sector by relaxing certain provisions of the previous regulations.  

For example, the amendment dropped three sub-sections (9, 12, and 14) of Section 3 of the 2006 regulations.

The first two required licensees to submit details of ownership and assets, while the third required that the companies provide an estimated production size and the amount of fuel needed for the purpose.

Established in 2003, the BERC operates under Bangladesh Energy Regulatory Commission Act 2003. Under 34(1) of the Act, the Commission in consultation with the government shall determine the price of power generation in wholesale, bulk and retail, and the supply of energy at the end-user level.

However, the 2016 amendment added a completely new section -- 16A -- that says prices of fuel (gas, oil, coal, LNG, etc) would be determined by the "government or according to the fuel distribution agreement between manufacturer and supplier."

All types of licence fees were also changed, while the licence period was extended from one year to three years.

OUTRIGHT ILLEGAL

GM Atiqur Rahman Zamaly, deputy secretary (drafting) of Legislative and Parliamentary Affairs Division of the law ministry, told The Daily Star that no government departments could issue any regulation without the ministry's permission.

Asked about the fate of the licences issued under the 2016 regulations, he said, "That is a separate issue. We have given our opinion only on that matter [the 2016 Regulations]." 

"But," he added, "if the Commission wants to know about the jobs done under the 2016 regulations, we will give our opinion again."

Supreme Court lawyer Jyotirmoy Barua said if a regulation becomes illegal, every licence issued under it must be renewed under the new regulation.

"Since the companies have no faults here, they can get exemption under the new law," he added.

Eminent jurist Dr Shahdeen Malik opined that if anyone goes to the court to challenge any of the decisions taken under the 2016 regulations, the court would likely rule in his favour.

"Without the law ministry's approval, no order could be issued by any government body," he told this newspaper.

Very recently, the BERC website published a draft copy of 2021 regulations. One of its clauses says the 2016 regulations are being abolished and any decision taken under clause 22 of the 2016 regulations will also be cancelled.

Clause 22 bestowed the power of circulating gazettes on BERC itself.

According to the 2021 draft, any complication arising from the decisions taken under the 2016 regulations would be settled through an executive decision.

Under section 59(1) of the BERC Act 2003, the Commission may make regulations by publishing it in the official gazette. To do so, the BERC should first send its proposal to the Energy Department, which then forwards it to the law ministry for vetting. Before this, BERC should take public opinion by pre-publishing the regulation, said a BERC official.

After the law ministry's approval, the BERC can publish it in a gazette. Only then will it have a Statutory Regulatory Orders (SRO) number to be considered as an official gazette.

There is no SRO number for the 2016 regulations.

Earlier, for the same reason, BERC had to cancel the Dispute Settlement Regulations-2014, which was also amended without an SRO number in 2016.

Abdur Rab Khan, who was chairman of the regulatory body when the regulations were amended, died last month.  

The current BERC Chairman, Abdul Jalil, declined to comment on the matter, saying, "If you have any question, raise it in the public hearing."