Shimly
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ISLAMABAD The Supreme Court on Wednesday observed that the prices of Compressed Natural Gas (CNG) and petrol cannot be linked and summoned the managing directors of Sui Southern and Sui Northern gas companies.
A two-member bench, comprising Chief Justice Iftikhar Muhammad Chaudhry and Justice Jawwad S Khawaja, hearing the case of CNG price issue, questioned the formula under which Oil and Gas Regulatory Authority (Ogra) linked the price of a domestically produced commodity (CNG) with an imported commodity (petrol).
The court also questioned how the Ogra was determining the CNG prices on a weekly basis when it actually should be determined biannually. The court sought a report on the pricing formula from Ogra chairman and issued notices to managing directors of Sui-Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL).
The chief justice observed it seemed as if the two companies, SNGPL and SSGCL, were enjoying a sort of monopoly under which they take decisions according to their own will. He observed that the linkage of the price of imported petrol with the dollar is understandable however CNG is domestically produced and questioned its linkage with the price of imported petrol.
Ogra Chairman Saeed Ahmed Khan informed the court that the 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 of CNG for the consumers should also be determined biannually instead of on a weekly basis.
The chief justice observed that Ogra is a regulatory body and as such it should not be influenced either by the government or the court in the discharge of its function. The CJP further observed 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 chief justice questioned which factor had increased the cost of the operation that necessitated an increase in the CNG price; and instructed the Ogra chairman to submit the tariff chart from August 15 to-date explaining the factors that led to an increase in the price of CNG and petroleum within two hours.
The Ogra chairman came back with the details of the tariff chart and added that petroleum prices are not completely deregulated and Ogra merely determines price of kerosene. He added that per barrel cost of crude was $118.2 on August 15 or Rs77.9 per litre on August 1, 2012. He informed the court that more than 90 per cent of oil imports are undertaken by Pakistan State Oil (PSO) whereas Ogra acts as a monitor of petrol price.
The 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 CJ said the unfair treatment meted out to the people will not be tolerated and warned that the court will have to issue some kind of order on Thursday (today).
Secretary Petroleum Waqar Masud informed the court that there is also a component of Gas Development Infrastructure Cess in the gas tariff while the price of petrol is determined by the bill of lading and failing that it is determined by the international price directory.
The PSO Managing Director informed the court that demand for petrol is 6 million tons per year from which one million tons is imported from Kuwait. The government pays PSO Rs1.76 per litre as service charge for diesel imports. He added that PSO is attempting to forge long-term relations with an oil producer directly.
At one point during the hearing, the courtroom was filled with satirical laughter when Secretary Petroleum Waqar Masood claimed the present government was providing more relief to the masses than the previous governments. The hearing was adjourned until today (Thursday).
A two-member bench, comprising Chief Justice Iftikhar Muhammad Chaudhry and Justice Jawwad S Khawaja, hearing the case of CNG price issue, questioned the formula under which Oil and Gas Regulatory Authority (Ogra) linked the price of a domestically produced commodity (CNG) with an imported commodity (petrol).
The court also questioned how the Ogra was determining the CNG prices on a weekly basis when it actually should be determined biannually. The court sought a report on the pricing formula from Ogra chairman and issued notices to managing directors of Sui-Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL).
The chief justice observed it seemed as if the two companies, SNGPL and SSGCL, were enjoying a sort of monopoly under which they take decisions according to their own will. He observed that the linkage of the price of imported petrol with the dollar is understandable however CNG is domestically produced and questioned its linkage with the price of imported petrol.
Ogra Chairman Saeed Ahmed Khan informed the court that the 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 of CNG for the consumers should also be determined biannually instead of on a weekly basis.
The chief justice observed that Ogra is a regulatory body and as such it should not be influenced either by the government or the court in the discharge of its function. The CJP further observed 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 chief justice questioned which factor had increased the cost of the operation that necessitated an increase in the CNG price; and instructed the Ogra chairman to submit the tariff chart from August 15 to-date explaining the factors that led to an increase in the price of CNG and petroleum within two hours.
The Ogra chairman came back with the details of the tariff chart and added that petroleum prices are not completely deregulated and Ogra merely determines price of kerosene. He added that per barrel cost of crude was $118.2 on August 15 or Rs77.9 per litre on August 1, 2012. He informed the court that more than 90 per cent of oil imports are undertaken by Pakistan State Oil (PSO) whereas Ogra acts as a monitor of petrol price.
The 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 CJ said the unfair treatment meted out to the people will not be tolerated and warned that the court will have to issue some kind of order on Thursday (today).
Secretary Petroleum Waqar Masud informed the court that there is also a component of Gas Development Infrastructure Cess in the gas tariff while the price of petrol is determined by the bill of lading and failing that it is determined by the international price directory.
The PSO Managing Director informed the court that demand for petrol is 6 million tons per year from which one million tons is imported from Kuwait. The government pays PSO Rs1.76 per litre as service charge for diesel imports. He added that PSO is attempting to forge long-term relations with an oil producer directly.
At one point during the hearing, the courtroom was filled with satirical laughter when Secretary Petroleum Waqar Masood claimed the present government was providing more relief to the masses than the previous governments. The hearing was adjourned until today (Thursday).
