Court: SC directs status quo in CNG prices till new pricing formula

ISLAMABAD: Declaring the Compressed Natural Gas (CNG) pricing formula as void, the Supreme Court on Friday directed the Oil and Gas regulatory Authority (Ogra) to prepare a new formula after obtaining all necessary feedback from the stakeholders and till that the current prices be kept unchanged.
Announcing its reserved judgment in the CNG pricing case, the Supreme Court held that OGRA had still not been able to come up with a pricing formula based on evidence and in accordance with the prescribed process. The court directed OGRA to discharge its obligations in accordance with the law and devise the new formula in a swift manner, and after obtaining all necessary feedback from the stakeholders.

The court noted that it was clear from a review of the relevant laws that the primary responsibility for determining the sale price of CNG for consumers fell on OGRA. The judgment authored by Justice Jawwad S. Khawaja noted that the policy guidelines issued by the federal government were to be given consideration by OGRA under Section 21 of the OGRA Ordinance.

The verdict held that various items of the CNG pricing formula appeared to have been determined arbitrarily and not in accordance with law and without any reference to the accounts of CNG stations. The verdict declared that fixing the sale price of CNG in the manner given in the MoU represented a clear violation of the law, as OGRA, which bore the primary responsibility in this area, was not even a party to the MoU.

The verdict said that instead of intervening to protect the public interest, OGRA simply chose to enforce the MoU, which constituted a blatant abandonment of its duties and abdication of its statutory role as protector of the interests of the citizens who had to bear the brunt of unjustifiable prices.

“Essentially, this represents one of those sad episodes of our history where the cartel of suppliers, the government and the regulator came together to enact a grand exploitation of the poorest and most helpless amongst the country’s citizens”, the verdict noted. The court ruled that OGRA has been envisaged as an independent body which is supposed to protect the public interest, thus its failure to protect ordinary consumers from oligopolistic and monopolistic activities cannot be condoned.
The verdict notes that rights of the people of Pakistan and their exploitation in violation of Articles 3 and 5 of the Constitution cannot be allowed to continue. The court reiterated that the determination of prices is a power vested by various laws on the executive functionaries and agencies of the State established under law and consequently, the executive has also been equipped by the law with sufficient expertise and enforcement capability for this purpose.

“Our duty however, extends to reviewing the manner in which the executive exercises its powers and to see that the fundamental rights of citizens including the right to their hard earned income is protected. We exercised this power by striking down OGRA’s pricing formula and directing it to prepare a new formula, in accordance with law. As the protector and enforcer of the fundamental rights of the people of Pakistan, the Court could not have done otherwise”, the court ruled in the verdict.

The court noted with great regret that throughout the hearings on issues of the greatest public importance, the approach of the executive authority which shares with OGRA the responsibility for sorting out this matter of highest significance, has not been helpful”.

The verdict noted that in various hearings, the court informed that the federal government was seized of this important issue and would take steps for its resolution. “On 17.12.2012 we were again told that the Cabinet was to meet on 18.12.2012 and would take decisions for resolution of the issue and also give policy guidelines. Yet, even as millions of CNG users continue to suffer because of the prevailing deadlock no guidelines were issued on 18.12.2012”, the verdict said.

The court pointed out that the price of per kilo of CNG increased from Rs33 in 2008 to Rs95 in 2012, adding that pricing structure of CNG included exorbitant additional charges. The court held that the questions relating to UFG losses and other issues raised in the petitions will be considered at the next hearing.

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