Ogra under fire for price spiral: CNG-dollar link strange, SC tells govt

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ISLAMABAD: True to their creed, bureaucrats dealing with the petroleum sector gave evasive answers to a simple question put to them by the Supreme Court: why do you link the price of locally-produced gas with the dollar?

A two-judge bench comprising Chief Justice Iftikhar Muhammad Chaudhry and Justice Jawwad S. Khawaja, which had taken up a case about weekly pricing of CNG, tried its best to get the answer, but in vain.

The proceedings, which started in the morning and continued till late afternoon, were adjourned to Thursday to discuss the same issue: under which law the government has linked the prices of CNG with those of other petroleum products.

The linkage of price of imported crude with the dollar was understandable, but the link between dollar and CNG (a locally-produced commodity) was not, the court observed. Petroleum and Natural Resources Secretary Waqar Masood informed the court that based on a resolution adopted by the National Assembly, he was taking a summary to the Economic Coordination Committee (ECC) of the cabinet recommending discontinuation of weekly adjustment in prices of petroleum products and CNG.

But he claimed that consumers had actually benefited from the practice of weekly pricing. However, the court did not buy the claim and said consumers were in fact crushed under heavy prices.

Oil and Gas Regulatory Authority (Ogra) Chairman Saeed Ahmed Khan informed the court that the regulator had opposed the idea of weekly pricing, saying that under rules the government could adjust the prices only twice a year, and not weekly.

He said gas tariff was determined by Ogra following the submission of a tariff petition by SNGPL and SSGCL twice a year (July and January). The CNG price was fixed at 60 per cent of petroleum products some six months ago. Ghyas Abdullah Paracha, the chairman of the supreme council of All Pakistan CNG Association (APCNGA), informed the court that the CNG price would decline by Rs20-25 if the government de-linked it with the dollar. The price will further decline to Rs15 if the government withdraws GIDC (gas infrastructure development cess) on CNG. The levy was imposed by the government last month for the development of Pak-Iran gas pipelines and other infrastructures, including import of LNG (liquefied natural gas).

Mr Paracha regretted that stakeholders were never consulted by the government before raising the gas prices. The court hinted at evolving a mechanism for the return of profits to consumers if it was established that the government had wrongly increased gas prices.

OGRA UNDER FIRE: The court criticised Ogra for acting like a subordinate to the government. “It is unbelievable that the cost of supply of gas and petroleum products increases on a weekly basis.”

The court warned that it would order auditing of the cost if it found fudging in the mechanism. The case might also be referred to the quarters concerned for a thorough investigation if it was found that Ogra was issuing notification for price increase without applying its mind and accepting whatever the government was telling it to do, the court observed.

“Ogra overlooked the legal provisions and did not care about the interest of consumers who resultantly suffered,” Justice Jawwad S. Khawaja said, adding that he was using a very guarded language.

“You (Ogra) are no more a regulator if you accept whatever the government tells you to do,” he said. “Ogra is a neutral body and you do not need to get influenced by the petroleum secretary or other government officers,” the chief justice said. He reminded that Nepra, which determines electricity tariff, was facing the music in the rental power producers (RPPs) case for not playing its role.

The Supreme Court said the interest of the end-user had to be protected at all cost, but Ogra was not realising that the state could not increase prices on its own without approval of the regulator. The court summoned managing directors of the Sui Northern Gas Pipeline and Sui Southern Gas Company for the hearing on Thursday.

 

Courtesy: Dawn


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