Extended relief: No change in CNG prices till Nov 19
CNG associations become party in case; court briefed on gas pricing, production.
ISLAMABAD:
The Supreme Court on Thursday issued directives to maintain the current prices of compressed natural gas (CNG) as fixed by the Oil and Gas Regulatory Authority (Ogra) until the next date of hearing of the CNG and petroleum products price case: November 19.
On October 25, a Supreme Court order led to a reduction in the price of CNG by over Rs30 – a 33% slash. Appreciating the step taken to reduce CNG prices before Eidul Azha, Chief Justice Iftikhar Muhammad Chaudhry said the credit for the price reduction went to Ogra, not the apex court, adding that a false impression had been created that the court had fixed the new CNG prices.
During the hearing, Ogra presented a formula for CNG pricing, recommending an end to operating costs in order to collect Rs5.75 towards production costs. Ogra also proposed lowering the CNG station owners’ profits per kilogramme from Rs11.20 to Rs2.95.
A two-judge bench, comprising Chief Justice Chaudhry and Justice Jawwad S Khawaja, observed that Ogra had to convince the court that there would be no exploitation of consumers in the new price formula.
Justice Jawad S Khawaja observed that Ogra was not subservient but an independent body which had to honour the constitutional rights of consumers. He went on to add that CNG associations had effectively become ‘cartels’, adding that the government had signed a memorandum of understanding (MoU) with these associations.
“It seems as if not only did the government create and recognise the cartels, but also favours them,” said Justice Khawaja.
The chief justice also took notice of a statement by Adviser to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain, who, in a television interview, claimed that a mafia was hindering the resolution of the petrol price case. The chief justice expressed his displeasure with the statement and said there was no concept of mafia in the court, adding that the mafia mentioned by Dr Asim was a huge challenge.
Later, the court also accepted applications filed by the CNG association and station owners to become parties in the case. Counsel for the CNG Association Hafeez Pirzada requested the court to allow him two weeks’ time to submit a comprehensive response.
During the proceedings, Wasim Sajjad, another counsel for Sindh CNG Association, prayed to the court to direct the government not to adopt coercive measures against CNG stations – to which the chief justice said: “We want that the government function independently and establish its writ.” However, he added that the court could not implement unnecessary taxes.
The court directed the Sui Northern Gas Pipeline Limited (SNGPL) Managing Director Arif Hamid and Sui Southern Gas Pipeline Limited (SSGPL) Managing Director Azeem Iqbal Siddiqui to assist the court in matters relating to the CNG price being paid by consumers. Hamid informed the court that the gas per unit cost is fixed at Rs18.40, while Iqbal told the court the price is fixed at Rs16.48 per kg, which the government fixed on October 27.
The managing directors also informed the court about the total production of the respective gas companies. The production stood at 1,860 million cubic feet (mmcf) at SSGPL and 1,100 mmcf at SNGPL, while the total demand was 4,000 mmcf. The 1,200 mmcf shortage was met through load-shedding, the managing directors informed the court.
Published in The Express Tribune, November 2nd, 2012.
The Supreme Court on Thursday issued directives to maintain the current prices of compressed natural gas (CNG) as fixed by the Oil and Gas Regulatory Authority (Ogra) until the next date of hearing of the CNG and petroleum products price case: November 19.
On October 25, a Supreme Court order led to a reduction in the price of CNG by over Rs30 – a 33% slash. Appreciating the step taken to reduce CNG prices before Eidul Azha, Chief Justice Iftikhar Muhammad Chaudhry said the credit for the price reduction went to Ogra, not the apex court, adding that a false impression had been created that the court had fixed the new CNG prices.
During the hearing, Ogra presented a formula for CNG pricing, recommending an end to operating costs in order to collect Rs5.75 towards production costs. Ogra also proposed lowering the CNG station owners’ profits per kilogramme from Rs11.20 to Rs2.95.
A two-judge bench, comprising Chief Justice Chaudhry and Justice Jawwad S Khawaja, observed that Ogra had to convince the court that there would be no exploitation of consumers in the new price formula.
Justice Jawad S Khawaja observed that Ogra was not subservient but an independent body which had to honour the constitutional rights of consumers. He went on to add that CNG associations had effectively become ‘cartels’, adding that the government had signed a memorandum of understanding (MoU) with these associations.
“It seems as if not only did the government create and recognise the cartels, but also favours them,” said Justice Khawaja.
The chief justice also took notice of a statement by Adviser to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain, who, in a television interview, claimed that a mafia was hindering the resolution of the petrol price case. The chief justice expressed his displeasure with the statement and said there was no concept of mafia in the court, adding that the mafia mentioned by Dr Asim was a huge challenge.
Later, the court also accepted applications filed by the CNG association and station owners to become parties in the case. Counsel for the CNG Association Hafeez Pirzada requested the court to allow him two weeks’ time to submit a comprehensive response.
During the proceedings, Wasim Sajjad, another counsel for Sindh CNG Association, prayed to the court to direct the government not to adopt coercive measures against CNG stations – to which the chief justice said: “We want that the government function independently and establish its writ.” However, he added that the court could not implement unnecessary taxes.
The court directed the Sui Northern Gas Pipeline Limited (SNGPL) Managing Director Arif Hamid and Sui Southern Gas Pipeline Limited (SSGPL) Managing Director Azeem Iqbal Siddiqui to assist the court in matters relating to the CNG price being paid by consumers. Hamid informed the court that the gas per unit cost is fixed at Rs18.40, while Iqbal told the court the price is fixed at Rs16.48 per kg, which the government fixed on October 27.
The managing directors also informed the court about the total production of the respective gas companies. The production stood at 1,860 million cubic feet (mmcf) at SSGPL and 1,100 mmcf at SNGPL, while the total demand was 4,000 mmcf. The 1,200 mmcf shortage was met through load-shedding, the managing directors informed the court.
Published in The Express Tribune, November 2nd, 2012.