ISLAMABAD: Directing the stakeholders to furnish a new price adjustment formula for Compressed Natural Gas (CNG) by December 5, Chief Justice Iftikhar Muhammad Chaudhry said that court was there to check that no one looted people of their money.
A three-member bench of the apex court, headed by Chief Justice Iftikhar Muhammad Chaudhry, heard identical petitions challenging the oil and CNG prices.The current prices of CNG will remain stable till December 5. The SC directed all the stakeholders to sit together and come out with an acceptable price formula to address the issue.
During the hearing, Oil and Gas Regulatory Authority (Ogra) Chairman Saeed Ahmed Khan rejected the audit report on CNG prices, saying that the maximum price of the gas should be Rs74 per kg.
He submitted that out of 350 companies only ten firms were audited and that the audit report suggested a CNG per kg price at Rs84 in the region-II, saying the rate should not be more than Rs74 per kg for region-II and Rs64.72 per kg for region-I.
Salman Akram Raja, counsel for Ogra, while arguing before the court, submitted that Ogra regulated the price formula on thebasis of a Memorandum of Understanding approved by the Economic Coordination Committee that was also withdrawn when the apex court found it illegal.
He, however, contended that at present affairs of the authority were being run on an ad hoc basis. He further submitted that in the absence of policy guidelines from the federal government, Ogra was determining prices on the basis of legitimate cost and fair return.
During the hearing, the chief justice pointed out that if Ogra was bearing all operational costs of CNG stations, including the electricity bill and profit margin, then what is the need to issue licences to the stations.
Salman Akram Raja submitted that 90 percent licences were issued during 2004-05. The chief justice appreciated the incumbent government when he was informed that after 2008, no CNG station was set up in the country.
Directing that all the illegal CNG stations be closed, the chief justice asked Raja to inform the court as to how many CNG licences were awarded on tenders and how many were allotted through illegal means. The counsel assured the court to provide the break-up on the next date of hearing.
The chief justice also directed the Ogra counsel to submit a year-wise breakup of CNG stations since 2002 and public land encroached in the name of these stations.
Raja told the court that a wrong impression is being created about gas shortage; however, he said that there is a severe energy crisis in the country, adding that 14 percent of SNGPL gas is being utilised by CNG stations, which is highest ratio in the world.
The chief justice asked the counsel to tell the government to formulate a unified policy in order to resolve the issue.
“Tell the government to make legislation and make the system transparent,” the CJ added.
Abdul Hafeez Pirzada, counsel for CNG stations owners, informed the court that prevailing price formula was not suitable as his clients were facing financial losses.
He told the court that 3,400 CNG stations were operating in the country from which 2,600 were established in the Punjab province.
He further submitted that as per auditor’s recommendations for price of CNG per kg should be at least Rs74 per kg, adding that as per Ogra’s version CNG owners are facing Rs11 loss per kg.
“There is no law, no rules, and no one, either the government or Ogra, has the authority to resolve the issue,” he submitted.
Pirzada contended that during last hearing, the petroleum secretary gave his assessment that Rs20 will be reduced per kg but later a notification of Rs30 was issued, while the government did not reduce its charges and taxes accordingly.
The chief justice, however, observed that the government should protect the rights of the consumers.
Wasim Sajjad, the counsel for CNG Association, Sindh chapter, asked the court to direct Ogra to fix new prices. The chief justice said that the court will not go in the price fixation process as it is done by Ogra. The CJ said that the Supreme Court will watch that no one grabs more money from the people’s pockets. If some persons say that it is not the duty of the court then the people will continuously be getting looted. The government should be told that people’s worries are multiplying, he added.
The chief justice stressed Ogra to contact the government for issuance of policy guidelines for the purpose and informed the court over it.
Meanwhile, the court directed that all the stakeholders should sit together and come up with an acceptable price formula by December 5 which must be acceptable to all, including the consumers, and adjourned the hearing.
ISLAMABAD: The Supreme Court on Monday distanced itself from the CNG price fixing saga and said it was the prerogative of the relevant authorities and stakeholders to agree on prices.
Heading a three-judge bench of the apex court, which also comprised Justice Sheikh Azmat Saeed and Justice Gulzar Ahmad, Chief Justice Iftikhar Muhammad Chaudhry said that it was the government’s domain to issue policy guidelines to the Oil and Gas Regulatory Authority (Ogra) to determine and fix petroleum prices. The court asked Ogra to devise a reasonable pricing formula till December 5, keeping the interest of consumers in mind.
“We are only concerned about the constitution and the fundamental rights of the citizens,” CJ Chaudhry said, adding that as per the law, Ogra could not regulate prices without government policy guidelines. The court also complained about sub-standard gas being supplied to some gas stations.
Justice Saeed observed, “There is no legislation, no administration and everything is going outside.”
Salman Akram Raja, Ogra’s counsel, conceded to the court that at present, the affairs of the authority was being run on an ad hoc basis. To a query, Raja said as far as the formula of prices was concerned, Ogra was regulating merely on the basis of a memorandum of understanding between Ogra and CNG stations owners, which was cancelled when the court deemed it illegal.
In the absence of policy guidelines from the federal government, Raja said, Ogra was determining prices on the basis of legitimate costs and a fair return.
The apex court pointed out that in the current setup, Ogra was bearing all the operational costs of CNG stations, including the electricity bill. The court also questioned the process of issuing of licences by Ogra for CNG stations. “Why did this licence not mention the price formula and its contents?” the chief justice asked.
Justice Ahmad observed that it seemed such lucrative rules were made by none other than owners of CNG stations. CJ Chaudhry said that in the name of CNG stations, a huge chunk of the National Highway Authority’s (NHA) land had been occupied by private investors, adding that licenses were being issued based on favouritism.
The apex court was informed that some 3,400 CNG stations were operating in the country, while Punjab alone had 2,600. Raja told the court that 90% of the licences were issued during the years 2004-2005.
The court also sought from Ogra the year wise break-up of CNG stations since 2002 and public land being encroached in the name of these CNG stations.
Abdul Hafeez Pirzada, the counsel for CNG owners, told the court that the present price formula was wrong and CNG owners were facing massive losses. He said that as per the auditor’s recommendations, per kg price of CNG should be at least Rs74, while as per Ogra’s own assessment, per kg price should be Rs65. Citing Ogra, he said that CNG owners were facing a loss of Rs11 per kg.
Pirzada said that CNG owners should not be arrested if they were closing down their stations. The chief justice observed that as per the constitution, they could not be arrested. However, Ogra could cancel their licences if they were not able to continue their business.
The counsel for the CNG Association Sindh, Wasim Sajjad, asked the court to direct Ogra to fix new prices. The chief justice said that the court would not go into the nitty-gritty detail of price fixing. But, he said, Ogra could announce new prices in consultation with stakeholders. The bench also asked Ogra to ask the government to issue policy guidelines for this purpose and inform the court about it on December 5, the next date of hearing.