Lingering issue: No change in CNG price till Dec 17, says apex court

Ogra authorised to cancel licences of unaudited CNG stations.

ISLAMABAD:

The Supreme Court on Thursday ordered that prices of CNG should remain unchanged till December 17, the next date of the case hearing, rejecting a request of the CNG station owners for an uptick in the price.

It also gave a go-head to the Oil and Gas Regulatory Authority (Ogra) to cancel licences of Compressed Natural Gas (CNG) station owners who refused to get audited. The court also ordered that the price of CNG would remain unchanged until the next hearing.

Petroleum Secretary Dr Waqar Masood informed the court that a cabinet committee would decide on the price of CNG within two weeks, once the audit of filling stations is completed.

A two-judge bench of the apex court, comprising Justice Jawwad S Khawaja and Justice Khilji Arif Hussain, observed that CNG station owners had no right to operate stations if they failed to justify their accounts, giving Ogra till December 17 to audit the accounts.

The court also held that CNG station owners would stop observing a strike when Ogra and the Competition Commission of Pakistan (CCP) played their role in the pricing controversy since it also involved consumers’ rights.  Distancing it from the price fixation issue, the court made it clear that it would only examine the process.

Furthermore, an official of the Federal Board of Revenue (FBR) submitted before the court the tax records of CNG station owners of the past three years. According to details, Rs4.08 billion was collected as tax from CNG stations from 2009-2011. The Supreme Court had also sought details pertaining to the stations’ tariff accounts. As per Ogra’s report, currently 3,395 CNG stations are operating across the country.

Ogra’s counsel Salman Akram Raja told the court that the federal cabinet had yet to approve its proposed new prices – Rs72.20 for region one and Rs63.76 for region two. The court, in its written order, held that it is expected that the issue would be taken up in the next federal cabinet meeting.



The court will also review Ogra’s steps on the price issue on December 17.

The court also expressed its dismay over a letter drafted by CNG station owners to Ogra, saying that there is no statutory requirement for such CNG stations to maintain the audited accounts on an annual basis. The court made it clear that such audits would not be conducted for tax purposes. The court was not satisfied with Ogra’s policy to grant thousands of licences out of only 6,000 applications for last 10 years.

Ogra also revealed to the court on Thursday that tax details and audit reports were not required for the issuance of CNG station licences under the CNG Rules 1992. Ogra also said that the All Pakistan CNG Association had informed that most stations are either under sole proprietorship or under an association of persons, adding that unlike limited companies there is no statutory requirement for such CNG stations to maintain audits on an annual basis.

Meanwhile, Chairman of the All Pakistan CNG Association Ghayas Paracha said Ogra was trying to implicate the association in a tussle with the public. He went on to add that CNG stations bought gas from the government on a higher rate and were facing huge losses due to the cut in CNG prices.

Ogra had earlier withdrawn a memorandum of understanding between CNG and the government due to which it also cut prices of CNG per kg by up to Rs31. Subsequently, CNG owners went on strike in protest and asked the court to direct Ogra for a reasonable fixation of price; however, the court declined their request, saying it was only concerned about procedural illegality and would not indulge itself with the price fixation mechanism.

Justice Khawaja reiterated that deciding prices was Ogra’s job and the court would only examine the issue of transparency in the procedure adopted for price fixation.

The hearing was adjourned till December 17.

Published in The Express Tribune, December 7^th, 2012.