IN THE SUPREME
COURT OF PAKISTAN
(Appellate Jurisdiction)
Present:
Mr. Justice Iftikhar Muhammad Chaudhry, HCJ
Mr. Justice Jawwad S. Khawaja
Constitution
Petitions Nos.33 & 34 of 2005 and HRC No.5332/2006
For the Petitioner(s): Nemo.
For the Federation: Mr. Habibullah Shakir, Dy. A.G.
On Court’s Notice:
For M/o Petroleum: Mr. Waqar Masood, Secy. Petroleum
For OGRA: Mr.
Saeed Khan, Chairman OGRA
For PSO: Mr.
Naeem Yahya Mir, M.D. PSO
For PPL: Mr.
Asim Khan, M.D. PPL.
For SSGC: Mr.
Azim Iqbal, M.D.
For SNGPL: Mr.
Arif Hameed, M.D.
Mr.
Asim Iqbal Ch.
ASC (for SSGC & SNGPL)
For NAB: Mr.
Akbar Tarar, Acting P.G.
Khawaja
Azhar Rasheed, ASC
Mr.
M. S. Khattak, AOR
For Byco: Mr.
Mujahid Ali Syed
For CNG Station Owners: Mr. Ghayas Piracha
In Const. P.34/05:
For the Petitioner: Nemo.
For the Respondents: Mr. Ali Sibtain Fazli, ASC
Mr.
M. S. Khattak, AOR
In HRC-5332/06: Nemo.
Date of Hearing: 25.10.2012
ORDER
We have heard the Secretary
Petroleum, Chairman OGRA, MDs SSGP and SNGPL and the representative of CNG
Station Owners. At the moment we only consider the mechanism/formula of price
fixation of CNG.
2.
The Chairman OGRA placed before us the following chart to
demonstrate CNG consumer price:-
CNG CONSUMER PRICE DETAILED BREAK UP.
|
S r #
|
Components
|
Price w.e.f.22.10.2012
Region-I
Rs./Kg Rs.MMBtu %
|
Price w.e.f.22.10.2012
Region-II
Rs./Kg Rs.MMBtu %
|
|
A.
B.
C.
D.
|
Average Well
head price/cost of gas paid to exploration
companies*
Operating Cost
of Gas Companies
Return on investment to gas companies
Other incomes (net of Prior year
adjustment, if any, etc.)
|
18.04
358.87 92%
1.14 22.69 6%
0.872 17.34 4%
-0.53 -10.63 -3%
|
16.48 358.87 92%
1.04 22.69 6%
0.796 17.34 4%
-0.49 -10.63 -3%
|
|
E=A
to D
|
Average
Prescribed price of natural gas
|
19.51 388.27 100%
|
17.83 388.26 100%
|
|
F
|
Sale
Price of natural gas for CNG stations as advised by Federal Govt. under
section 8(3) of OGRA,Ordinance including GDS/cross subsidization.
|
35.19 700.32 38%
|
32.14 700.02 38%
|
|
G.
|
**Operating Cost of CNG Stations
|
20.80 113.80 22%
|
20.80 453.01 25%
|
|
H
|
Profit of CNG Station Owners.
|
11.19 222.60 12%
|
10.59 230.61 13%
|
|
I.
|
GIDC
|
13.25 263.57 14%
|
9.18 200.00 11%
|
|
J
|
GST
(25% of Price F+1)
|
12.10 240.69 13%
|
10.33 225.00 12%
|
|
K
|
Differential Margin for Region –II
|
---
|
1.50 32.67 2%
|
|
|
Total
CNG Consumer Price (F-K)
|
92.53 1,840.98 100%
|
84.54 1,841.31 100%
|
Petrol Price (Rs./Ltr) 102.08 3.069 102.08 3.069
*Well head price (cost of gas price)
as per GPAS for Sui & Kandhkot is attached for illustration (copy annexed)
**Operating Cost includes compression
cost, maintenance, depreciation, fee etc as per MoU signed b/w CNG Association
& FG.
|
Prices
|
on
15.10.2012
|
|
94.66
1,883
103.40 3,139
|
86.48 1,883
103.40 3,139
|
CNG Price Petrol
Price
2. We have objected on the inclusion of difference between the average prescribed price of natural gas A to D and F, difference of which comes to Rs.15.68 for Region-1 and Rs.14.3 for Region-II w.e.f. 22nd October, 2012 respectively as well as on the operating cost of CNG stations, profit of CNG Station Owners, noted hereinabove because in absence of any statutory provision OGRA is not authorized to fix the operating costs and profit of the operators of CNG Stations, arbitrarily. Similarly, on the issue of linkage between the price of the CNG and petrol price, which comes to Rs.9.55 and Rs.17.48 per kg, respectively. We have observed that price of CNG legally cannot be linked with the price of petrol. It is also to be noted that the prices of CNG are being fixed on weekly basis, in pursuance of the decision of ECC dated 7th August, 2012, copy of which has also been placed on record. When we inquired from the Secretary Petroleum he candidly conceded that CNG is not covered under the definition of petroleum products. We asked him to explain as to why the prices of CNG are being revised on weekly basis, he answered that in this behalf a resolution has also been passed by the National Assembly that the prices of petrol products etc. may not be determined on weekly basis but so far no decision has been taken in the ECC. For such reasons the Secretary Petroleum promised on 24.10.2012, to look into all these aspects of the matter. Accordingly today, a statement has been filed by him, which is reproduced as under:-
“1. The
undersigned, Waqar Masood Khan, Secretary, Ministry of Petroleum and Natural
Resources, in pursuance of the orders of the Hon’ble Court, after the hearing
on 24.10.2012 respectfully submits as follows:-
1.
The Ministry of
Petroleum and Natural Resources will expend additional efforts to ensure that
domestic and life-line consumer’s interests in matters of gas pricing are fully
protected;
2.
In particular, in
the case of pricing of CNG, the arrangement evolved for linking it with the
price of petrol on weekly basis will be abandoned.
3.
The Cost of Gas for
the CNG sector will be adjusted only after the determination of prescribed
price by OGRA as per law.
4.
With immediate
effect, the price will be brought to the level that was fixed for CNG sector
subsequent to the determination of price by OGRA for the six months beginning
1.7.2012.
5.
The MOU through
which Government and CNG Associations had agreed on a formula for operating
cost of CNG stations will be immediately suspended and OGRA will develop a new
formula after seeking information about the availability of gas, linkages with
alternate fuel, discussion s with all stakeholders and after scrutiny of
audited accounts of CNG stations as per rules.
6.
The Ministry of
Petroleum and Natural Resources pursuant to the Resolution of the National
Assembly has already moved a Summary to the Cabinet [ECC] as per rules for the
review of the decision to adjust petroleum prices on weekly basis thus paying
due respect to the Resolution of the National Assembly. It has already
communicated to OGRA not to increase the price on weekly basis till the
decision of the ECC as per law.
2.
Further, a copy of
the Resolution of the National Assembly regarding monthly adjustment of prices
is placed at Annexure-1.
3.
Additionally, a
copy of the Petroleum Policy 2001 as desired during the hearing is also
enclosed.
Waqar
Masood Khan
Secretary,
Petroleum
and
Natural Resources.
25.10.2012”
3. On
our inquiry he stated that the prices of CNG shall be brought to the level that
was fixed for CNG Sector after determining the price by OGRA for the six months
starting from 1.7.2012 and that the MOU through which Government and CNG
Associations had agreed on a formula for operating cost of CNG stations will be
immediately suspended and OGRA will develop a new formula after seeking full
information about the availability of gas, linkages with alternate fuel,
discussion with stakeholders and after scrutiny of audited accounts of CNG
Stations as per rules, thus, prices of CNG shall be reduced, approximately, to
the extent of Rs.20/- per k.g.
4. We
have also expressed our reservations in respect of GDS/cross subsidization as
mentioned in para F of the above reproduced chart. The OGRA in exercise of its
powers under Section 8 (1) and (2) of the OGRA Ordinance, 2002 shall oblige to determine estimate of total
revenue requirement of each licensee for natural gas engaged in transmission,
distribution and the sale of natural gas to a retail consumer for natural gas,
in accordance with the rules and on basis of such advice the Federal Government
shall prescribe price of natural gas for each category of retail consumer for
natural gas under section 8(3) of the OGRA Ordinance. Therefore, there must be
a rationale for charging the difference noted hereinabove. The Secretary
Petroleum has pointed out that this is a surcharge being recovered from the
consumers in accordance with Section 8 (5) of the ORGRA Ordinance, 2002. His
this statement is not acceptable at this point of time. On this he requested
for some time to ponder over these issues and to reach at an acceptable
conclusion.
5. Mr.
Ghayas Peracha, a representative of the CNG Station Owners has also pointed out
a number of objections regarding fixation of the CNG Prices without any
rationale.
6. We
have noticed that on account of non discharging of functions in accordance with
law by the Authority there have been a lot of objections from one side or the
other, however, we adjourn this matter with direction to the Chairman OGRA to
fix the price of CNG after taking into consideration the statement in writing
filed by the Government through its Secretary as well as discussion made
hereinabove.
Let the matter be listed for further
proceedings on 1st November, 2012.
Chief Justice
Judge
ISLAMABAD
25.10.2012
