SC questions why prices of locally produced gas are linked to imported petrol

SC issues notices to SNGPL and SSGC over gas prices and seeks report on gas pricing formula from Ogra

ISLAMABAD: The Supreme Court on Wednesday flayed the bureaucracy as it questioned the mechanism for reviewing petroleum prices on a weekly basis and its linkage to gas prices.

“The civil bureaucracy responsible ‘to make effective the energy policy of the government’ failed to satisfy the highest court of the country regarding price mechanism of petroleum products,” a two member bench consisting Chief Justice Iftikhar Muhammad Chaudhry and Justice Jawwad S. Khawaja said as they heard the case on mechanism of fixing petroleum prices and of linking prices of gas to petrol.

“So don’t insist on theoretic arguments tell us why the common people are being crushed in the name of different charges and fluctuation in the prices of these products,” the bench asked Secretary Petroleum Dr Waqar Masood and Chairman Oil and Gas Regulatory Authority (OGRA).

The chief justice also asked “why is the burden always passed on to the consumers?”

The debates continued all day on this issue, after which the army of the secretaries finally confessed that gas, a domestically produced fuel, does not have anything to do with petroleum products, which are mostly imported.

Chief Justice Chaudhry though observed that the linkage of the price of imported petrol with the dollar is understandable however compressed natural gas (CNG) is domestically produced and questioned its linkage with the price of imported petrol.

Chairman Ogra Saeed Ahmed Khan informed the court that tariff is determined by OGRA subsequent to submission of a tariff petition by SNGPL and SSGCL twice a year (July and January). The Chief Justice observed that in that case tariff for the consumers should also be determined biannually instead of on a weekly basis.

Chairman OGRA also informed the court that gas price for consumers can be determined biannually upon which the Chief Justice queried how the authority would compensate the consumers for the weekly raise in tariffs paid so far.

The bench also observed that instead of acting as a regulator, Ogra has become a redundant body within the new mechanism of fixing petroleum prices. “Unfortunately, the government is now hands and gloves with the Oil Marketing Companies (OMC),” Justice Khawaja lamented.

Chief Justice Chaudhry said that there must be a mechanism under which OGRA should implement its policies as a regulator and should ensure the interests of the consumers.

The bench also made it clear that it will pass an order, probably on Thursday, about new arrangements for fixing petroleum prices.

Dr Masood told the court that the issue will be tabled in the ECC’s meeting as a parliamentary resolution has also been passed on this issue.

“But being an expert on the issue I must say that weekly basis review of prices formula was in betterment of the consumer,” Dr Masood maintained, who is also an economist with expertise on energy related issues.

The court also pointed out negligence of the incumbent government due to which billions of rupees losses incurred to the national exchequer during the tenure of illegal appointed chairman Ogra Tauqir Sadiq, who is currently proclaimed offender and, as per NAB’s submitted report before the court on Wednesday, facing a reference of Rs80.56 billion financial misappropriation in an accountability court of NAB in Rawalpindi.

Issuing notices to Managing Directors of Sui-Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) in oil pricing case, the bench sought a report on the formula used for gas pricing from Chairman OGRA Saeed Ahmed Khan.